1002 GMT - European stocks will perform strongly despite escalating hostilities in the Middle East and the prospect of tighter European Central Bank policy, UBS strategists say. Higher energy prices could cause the ECB to raise interest rates by a quarter percentage point in September, but "still-fragile economic growth outlook should prevent that move from developing into a sustained hiking cycle." Improved manufacturing on the continent and rising corporate earnings will benefit European stocks, while an increase in German government spending should lift domestic demand, the strategists say. "We believe investors should look beyond the recent weakness in European stock." The Europe-wide Stoxx 600 rises 0.15%. (josephmichael.stonor@wsj.com)

(END) Dow Jones Newswires

July 20, 2026 06:03 ET (10:03 GMT)

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