European markets head for cautiously higher open, continuing positive global trend

LONDON — European stocks are set to open cautiously higher on Monday after gains seen last Friday, although Italy’s main index is seen opening in negative territory amid political uncertainty.

The U.K.’s FTSE index is seen opening 12 points higher at 7,129, Germany’s DAX 12 points higher at 12,881, France’s CAC 40 up 11 points at 6,051 and Italy’s FTSE MIB 51 points lower at 20,799, according to data from IG.

That comes amid more buoyant global sentiment. In Asia-Pacific markets on Monday, Hong Kong’s Hang Seng jumped more than 2%, while U.S. stock index futures were modestly higher early on Monday morning after a positive end to the week last week.

Friday’s relief rally came as traders bet that the Federal Reserve will be less aggressive at its upcoming meeting. The Wall Street Journal reported Sunday that the central bank is on track to lift interest rates by 75 basis points at its meeting later this month, rather than a larger, full-percentage-point increase that some analysts had forecast.

Recession fears have dominated trading sentiment in recent weeks as market participants worry that aggressive action from the Fed — in an effort to tame decades-high inflation — will ultimately tip the economy into a recession.

Last week, fresh inflation data showed consumer prices jumped 9.1% in June, a hotter-than-expected reading and the largest increase since 1981. That, in turn, led traders to bet that the Fed could raise rates by a full percentage point at its meeting at the end of July.

Haleon shares are expected to commence trading on the London Stock Exchange’s Main Market as an independent, listed company, after GSK shareholders approved the demerger of its consumer health-care business.

There are no major earnings or data releases Monday.

— CNBC’s Pippa Stevens contributed to this report.