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European markets edged cautiously higher on Monday, coming off a lost week as surprise comments from major central banks signaled further monetary tightening in 2023.

The Stoxx 600 was up 0.7% by mid-morning, with all sectors and major exchanges trading in positive territory. Oil and gas led the way, up 2.4%.

The European Central Bank on Thursday raised its key interest rate from 1.5% to 2% and said it would try to reduce its balance sheet by about 15 billion euros ($15.9 billion) every month from March 2023 until the end of the second quarter. The ECB said rate hikes should continue at a “significantly sustained pace”.

The Bank of England and the Swiss National Bank followed a similar tone and also opted for 50 basis point hikes in line with the US Federal Reserve’s decision on Wednesday. Fed Chairman Jerome Powell also noted that the central bank’s efforts to curb inflation are far from over, and said policymakers “need to stay at it.”

The moves sent the Stoxx 600 into sharp losses for two straight sessions, sending the European blue-chip index to near five-week lows.

Asia-Pacific markets retreated on Monday as traders struggled to overcome recession fears while Chinese officials pledged to stabilize the country’s economy in 2023 and maintain ample liquidity in financial markets.

U.S. stock futures were marginally higher in early trade on Monday, as Wall Street’s main averages posted their second straight week of losses for the first time since September.

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