German share price index DAX graph is pictured at the stock exchange in Frankfurt
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, June 2, 2022.

European shares rose on Monday, helped by banks and commodity-linked stocks, as investors kept an eye out for U.S. inflation data and details from a European Central Bank meeting later this week.

The pan-European STOXX 600 index rose 0.9%, after posting a loss of nearly 1% last week on concerns about economic growth amid rising prices and bets of monetary policy tightening by major central banks.

Banks, which typically appreciate in a high interest rate environment, rose 1.7%.

Miners climbed 2.5% and luxury stocks also rallied as sentiment in the sectors, which derive significant demand from China, was lifted by authorities easing more curbs in Beijing and Shanghai. [.SS] [MET/L]

"Chinese economic markets are assuming that we're going to see a significant improvement in economic data over the course of the next two or three months," said Michael Hewson, chief markets analyst at CMC Markets.

"We're seeing a modest rebound in Europe... markets are trading in a little bit of a holding pattern ahead of some key central bank announcements and data releases."

The ECB on Thursday is expected to confirm an end to bond buying this month and investors will be looking for clues on monetary policy.

Markets have ramped up bets on ECB interest rate rises this year after data last week showed euro zone inflation at a record high. A bigger, 50 basis-point hike at one of the bank's policy meetings by October is being priced in.

Meanwhile, U.S. inflation data due on Friday is seen showing a rise month on month. The Federal Reserve has signalled rate hikes this month and the next, and strong inflation numbers could raise bets of an extended rate hike cycle.

Technology stocks gained 1.9% on upbeat global sentiment. [MKTS/GLOB]

London's commodities heavy FTSE 100 jumped 1% after an extended weekend.

British Prime Minister Boris Johnson will face a confidence vote later on Monday, the chairman of the 1922 Committee Graham Brady has told lawmakers, after a report documented alcohol-fuelled parties when Britain was under strict COVID lockdowns.

"There is potential for a period of uncertainty ahead for the UK.. we could see Johnson survive the vote, only to call a general election," said Stuart Cole, head macro strategist at Equiti Capital.

Clontarf Energy Plc tumbled 72% after Western Gas said its Sasanof-1 exploration well off Western Australia found no hydrocarbons. Clontraf is one among Western Gas's partners in the Sasanof-1 well.