European stocks rebound as corporate optimism lifts mood ahead of rate decisions

By Sudeshna Ghoshal and Niket Nishant

Oct 26 (Reuters) - European shares staged a recovery on Monday as upbeat corporate updates helped investors look past elevated oil prices at the start of a week packed with central bank policy decisions.

The pan-European STOXX 600 index .STOXX closed 0.77% higher at 640.66 points, led by gains in British technology services provider Computacenter CCC.L and Danish biotech Genmab GMAB.CO.

The gains illustrate how company-specific catalysts can still lift markets, even at a time when macroeconomic concerns are weighing on sentiment. European equities were battered last week after tensions in France and higher oil prices.

Computacenter closed over 13% higher, its steepest one-day gain since April, after forecasting annual profit above market expectations for the fourth time this year.

Genmab GMAB.CO rose 12% after it reported encouraging follow-up data from a mid-stage trial of an experimental colorectal cancer treatment.

Meanwhile, a survey by the Ifo institute showed German business morale improved more than expected in October. Germany's benchmark index .DAX gained 0.9%.

Most major sector indexes on the STOXX traded higher, with defence stocks .SXPARO in the lead following a 2.6% gain.

Travel and leisure stocks .SXTP rose 1.9%, while the energy index .SXEP dipped 0.2%.

Investor attention now turns to monetary policy decisions out of the European Central Bank and US Federal Reserve, due later this week.

The ECB is set to meet on Thursday, with a pause widely anticipated after the central bank raised rates in June and September to counter ​rising inflation, as the Iran war pushed up energy prices. Economists polled by Reuters expect a quarter-point rate hike in December.

"This is a week to not pile into the market. Investors are going to see this as a week to reassess expectations, the direction of the market in many areas, whether that's bank policy, geopolitics — there's many things in play," said Daniela Hathorn, senior market analyst at Capital.com.

Portugal's Galp Energia GALP.LS, meanwhile, fell 10.8% after the company said talks with Spain's Moeve to combine their refining, chemicals and fuel retail businesses had collapsed. The stock was among the worst performers on the STOXX 600 and saw its biggest one-day decline since December.

Investors also parsed AI heavyweight Anthropic's paperwork for its initial public offering in the US.

"A hectic week for politics, central banks and corporate earnings reports may well be dominated by continued jitters around the sustainability of the AI equity boom," said Jonas Goltermann, chief markets economist at Capital Economics.