European shares gain on China recovery optimism

(Updates prices, details and adds comment) * Luxury stocks, commodities pop as China eases COVID curbs * Leonteq slips after 2022 profit expectations cut * German businesses expect only mild recession as

disruptions ease * STOXX 600 up 0.4% Dec 27 (Reuters) - European shares climbed on Tuesday,

tracking a global rally in equities after China further relaxed

its COVID-19 curbs, raising hopes of a recovery in the world's

second-largest economy. The pan-European STOXX 600 index gained 0.4% to

start the holiday-shortened week higher. China on Monday said it would drop its quarantine

requirements for inbound visitors, further easing three-year

border controls aimed at curbing COVID. While London and Dublin markets remained closed for the

Christmas holiday, most European bourses advanced in early

trading. Chinese reopening and the in-line U.S. inflation data on

Friday could provide a "minor boost to equity markets," said

Ipek Ozkardeskaya, senior analyst at Swissquote Bank. However, rise in COVID-19 cases in China could "throw a

shadow on the reopening glow," Ozkardeskaya added. China-exposed luxury firms LVMH and Richemont

rose nearly 1.7% each. Miners and energy stocks added 1.0% and

1.4%, respectively, as commodity prices jumped on hopes of

demand recovery in top consumer China. Industrials and banks gained for a second

straight session, lifting the broader European index. Traders and analysts said thin trading volumes also

influenced market moves. German companies expect only a mild recession next year despite headwinds from the energy crisis, raw

material shortages and a tepid global economy, a Reuters survey

showed. Shares in Germany, Europe's largest economy,

gained 0.5%. The European STOXX 600 index has lost nearly 12% so far

this year, and is headed for its worst annual performance since

2018, on fears of economic recession due to aggressive monetary

policy tightening by central banks globally. Among individual movers, Leonteq fell 4.4% after

the Swiss fintech firm said it was lowering its profit

expectations for 2022 due to reduced client demand in the second

half of the year. Belgium-based Lotus Bakeries NV declined 4.6% to

the bottom of the index.

(Reporting by Bansari Mayur Kamdar in Bengaluru

Editing by Vinay Dwivedi and Eileen Soreng)