Domestic travel boosts Spain's tourism to pre-pandemic levels

DOMESTIC TRAVEL BOOSTS SPAIN'S TOURISM TO PRE-PANDEMIC LEVELS (1028 GMT)

Even as Europe struggles with economic headwinds, domestic tourists led the rebound in Spanish tourism to pre-pandemic levels in July, according to Wouter Thierie, an economist at ING. So much so, that it even compensated for a drop in foreign visitors, which is still some 10% below 2019 levels.

Still, the gap in international arrivals with its pre-COVID levels is narrowing rapidly as Spain welcomed 9.1 million foreign tourists, equivalent to 92% of its pre-pandemic level in July, with about 21%, the most of all international tourists, coming from the United Kingdom.

Employment in tourism accounted for half of all new jobs in Q2 in Spain, Thierie said. According to data from Turespaña, the national tourism body of Spain, the employment rate in the tourism sector already reached its pre-pandemic level in April.

Uncertainty related to the war in Ukraine, rising inflation, and high energy prices continue to pose a risk to tourism recovery but the sharp increase in hotel prices did not deter tourists from booking overnight stays. What could pose as an even bigger threat, according to Thierie, is the sharp decline in consumer confidence, which could result in many cutting back on their tourism spending.

The STOXX 600 travel & leisure index has fallen more than 18% so far this year.

(Shreyashi Sanyal)

CS UPBEAT ON UK DOMESTIC BANKS (1007 GMT)

In its latest equity strategy update, Credit Suisse sticks to its call of UK stocks being its top regional overweight and within this preference it favours UK domestic banks.

Their upbeat case for UK lenders leverages on their cheap valuations, rising interest rates and credit resilience.

"They are very cheap on our macro models. They benefit abnormally from higher rates (as the full impact is not passed on to depositors)," say strategists at the Swiss bank.

"They diversify (in an environment where the bond to equity correlation has turned positive for the most part) and we are convinced , as is our banks team, that this time around banks’ NPLs are much more resilient to a mild economic recession," they add.

(Danilo Masoni)

AUTOS, BANKS LIFT EUROPEAN STOCKS (0813 GMT)

European shares are on the up, with the STOXX 600 rising 0.4% as traders keep an eye on developments in Ukraine and wager on how U.S. inflation numbers will look on Tuesday.

Autos are leading gains, up 2.2%, followed by banks , up 1.8%. The worst performing sector is healthcare , down 0.7%.

Sweden's Thule is the biggest faller on the index, dropping 9.2%, followed by shares in Tate & Lyle which are down 4.7%.

Germany's Uniper is the biggest riser, up 5.6%.

(Lucy Raitano)

WAR AND U.S INFLATION IN FOCUS: (0637 GMT)

European futures contracts are signalling rises at the open, up about 0.7% with attention on the weekend's developments in Ukraine and U.S. inflation data due this week.

FTSE futures are underperforming, up 0.3%.

A rapid weekend offensive by Ukrainian troops forced Russia to abandon its main bastion in the Kharkiv region.

The release of latest U.S. CPI numbers is due Tuesday, with some expectations that it could show inflation peaking across the pond - an important factor for assessing future rate hikes by the Fed.

Numbers on Monday showed Britain's economy grew by less than expected in July when it expanded by 0.2% from June with a fall in power production possibly reflecting higher energy tariffs .

The UK's largest energy supplier Centrica is planning to voluntarily cap profits in an effort to cut household bills, the Guardian newspaper reported on Saturday, citing Chief Executive Chris O'Shea.

Dutch shareholders in Philips are threatening to take the company to court over its handling of a global recall of respiratory machines.

Better news is coming from insurer Swiss Re which said global geopolitical tensions, macroeconomic developments and climate change have heightened demand for risk protection and will lead to increased premiums.

BREAK ON THROUGH: (0615 GMT)

After months of stalemate, the frontlines are suddenly fluid in fighting over Ukraine's east. Russia has hastily abandoned Izium, its bastion beneath Kharkiv, and lost control of the rail hub supplying its forces in the northeast.

The swift manoeuvres ought give cause for markets to reconsider the range of outcomes. Grinding attrition remains one, but re-conquest - or some unpredictable sort of Russian retaliation - have entered the equation.

Risks have probably gone up. Still, wheat futures dipped in Asia as France fell in with efforts to bring more Ukrainian grain to global markets.

Stocks were gliding on Wall Street's tailwinds, with the hope that tomorrow's U.S. inflation data shows the sort of cooling progress that could temper the interest rate outlook.

Later on Monday, monthly British growth data is due along with industrial and manufacturing output.

Mourning and geopolitics may fill out the rest of the week before policy risk is front and centre next week; with central bank meetings in the U.S., England and Japan.

The coffin of Queen Elizabeth traversed sunlit Scottish highlands to Edinburgh on Sunday, and will lie in St. Giles Cathedral today before going to London on Tuesday.

Xi Jinping will leave China for the first time in more than two years this week to meet Vladimir Putin at the ancient Silk Road entrepot of Samarkand. It will be the pair's 38th encounter since Xi became China's president in 2013.

Xi and U.S President Joe Biden are yet to meet in person since Biden's inauguration in 2021.

Key developments that could influence markets on Monday:

Economics: British GDP, industrial and manufacturing output

Speakers: ECB's de Guindos and Schnabel