European markets climb as January trading comes to an end; Stoxx 600 up 1%

LONDON — European stocks were higher on Monday, the last trading day of January, as investors kept an eye on political developments between Russia and Ukraine as well as inflation data.

The pan-European Stoxx 600 index gained 1% in early trade, with tech stocks jumping 2.2% to lead gains as most sectors and major bourses entered positive territory. Travel and leisure stocks slipped 0.5%.

In terms of individual share price movement, Swedish chemical manufacturing company Hexpol climbed 7% to lead the Stoxx 600. At the bottom of the European blue chip index, compatriot pulp and paper company BillerudKorsn?s fell 3.2% after Citigroup cut its price target for the stock.

The higher open in Europe came after major Asia indexes jumped overnight with the Nikkei 225 in Japan rising 1.07% to close at 27,001.98 while the Topix index climbed 1.01% to 1,895.93. Markets in Hong Kong and Singapore closed early on Monday ahead of the Lunar New Year holidays.

Official data released Sunday showed Chinese factory activity growth slowing in January. The country’s official manufacturing Purchasing Managers’ Index for January was at 50.1, just above the 50 level that separates growth from contraction. A private survey released over the weekend showed Chinese manufacturing activity contracting in January.

Meanwhile, U.S. stock futures were higher in overnight trading on Sunday as investors braced for the final trading day in what could be the worst month for the S&P 500 since March 2020. Markets have been roiled by volatility in January as investors worry about inflation, supply chain issues and the upcoming rate hikes from the Federal Reserve.

The Fed indicated last week that it is likely to raise interest rates for the first time in more than three years in order to combat historically high inflation. Markets are now pricing in five quarter-percentage-point interest rate hikes in 2022 with the first coming in March.

Investors in Europe are keeping an eye on developments between Russia and Ukraine with the UN Security Council set to meet on Monday to discuss ongoing tensions between the neighbors amid a build-up of soldiers on Russia’s border with Ukraine.

Earnings came from Ryanair on Monday and data releases include preliminary fourth-quarter GDP (gross domestic product) data for the euro zone and preliminary inflation data for January from Spain and Germany.

— CNBC’s Maggie Fitzgerald and Eustance Huang contributed to this market report.