(Bloomberg) -- European equities advanced as enticing valuations, relaxation of Shanghai’s lockdowns as well as optimism over the easing of China’s corporate crackdown outweighed rising concerns about stagflation.

The Stoxx Europe 600 rose 0.7% at 8:02 a.m. in London. Miners, energy and travel and leisure led the advance among sectors. 

European stocks have been under pressure this year amid a flurry of concerns, including the war in Ukraine, soaring inflation and slowing growth. Investors have been particularly worried that monetary tightening amid surging commodity and cost-of-living prices might push major economies into recession. 

Now, bargain hunters are scooping up the region’s shares with valuations trading near pandemic lows. Fueling the risk-on mood even further, Shanghai is tentatively unraveling a punishing lockdown, while Chinese tech stocks jumped on optimism that a meeting between the nation’s top regulators and corporate giants would result in Beijing dialing back its yearlong clampdown of the industry.

“Sentiment overall is quite poor but it’s improving,” said Mehvish Ayub, a senior strategist at State Street Global Advisors, adding that the firm moved to neutral on European equities from an underweight position. “There are a number of reasons why we should still be holding equities at this level,” including stronger earnings and the possibility for further upside from current levels, she said in an interview with Bloomberg Television.

Goldman Team Cuts Short-Term Stocks Outlook Amid Dour Sentiment

Meanwhile, Goldman Sachs Group Inc. strategists including Christian Mueller-Glissmann lowered global equities to neutral on a three-month view while remaining overweight on a one-year time horizon. The “market narrative has shifted to stagflation with rising and sticky inflation and negative growth momentum,” they wrote in a note.

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