* Hawkish Fed had cut short a 4-week winning streak
* Morrisons surprise bid lifts rivals Tesco, Sainsbury
* ECB President Lagarde to speak to European Parliament
* BoE decision awaited this week
(Recasts with change in market)
By Sagarika Jaisinghani and Ambar Warrick
June 21 (Reuters) - European stocks recovered from early
losses on Monday, led by growth-exposed sectors as the prospect
of a strong economic recovery this year offset recent jitters
caused by a hawkish U.S. Federal Reserve.
The pan-European STOXX 600 index rose 0.2% by 1332
GMT after falling to its lowest since June 3 earlier in the
session.
The index had snapped a four-week winning streak following
signals from the Fed that it could raise interest rates much
sooner than expected.
But strong gains in automobile and chemical
stocks fished the index from more than two-week lows, as
investors bet that a steady vaccination program will drive a
strong economic recovery in the euro zone.
Automobiles surged 2.4% after lagging most of their peers
last week, while chemicals added 1.2%, hovering near record
highs.
Basic resources surged 1% after hitting a near
three-month low.
Industrial stocks have largely benefited from improving
sentiment over manufacturing activity, as more economies open up
from COVID-related lockdowns.
"We believe the Fed’s new outlook will not translate into
significantly higher policy rates any time soon," BlackRock
analysts said in a note.
"Within equities, we have been warming up to cyclical stocks
as the (economic) restart broadens globally, as reflected in an
overweight call on UK equities and our upgrading of European
equities to neutral earlier this year."
The benchmark STOXX 600 scaled record highs this month after
the European Central Bank, in stark contrast to the Fed, said it
was premature to discuss tapering its pandemic-era monetary
stimulus.
Focus on Monday will be on a speech by ECB President
Christine Lagarde to the European Parliament, while later in the
week, investors will keep a close eye on business activity data
from across the euro zone for clues on whether a recent surge in
inflation will persist.
London's FTSE 100 rose 0.1%. The Bank of England is
expected to keep interest rates at a record low when it convenes
on Thursday.
Shares in Morrisons, Britain's fourth largest grocer
by sales, were up 32.3% after it rejected an offer worth 5.52
billion pounds ($7.62 billion) from private equity firm Clayton,
Dubilier & Rice.
Rivals Tesco and Sainsbury's rose 1.3% and
3.8%, respectively, while an index tracking UK personal goods
and grocery stores stocks rose 0.8%.
Italian-American vehicle maker CNH Industrial rose
0.7% after agreeing to a deal to buy Raven Industries
at an enterprise value of $2.1 billion.
(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by
Shounak Dasgupta and Mark Heinrich)
Tesco (TSCO)
Sainsbury's (SBRY)