Rise in inflation not to weaken euro area economy: UBS

The rise in inflation in the eurozone will not weaken its economy or threaten the stock market growth, the UBS stated. According to UBS experts, the inflationary pressure is not widespread, and besides, the upward pressure is unlikely. The bank's experts also pointed out that the ECB signaled that it would not tighten its policy in response to the temporary rise in prices.

"We believe that while ECB critics may find additional ammunition in the recent spike in headline inflation, we see good arguments in favor of the ECB sticking to a loose monetary policy. Against this background, we recommend investors position themselves in reflective trading, where energy and finance are our most favored sectors," Mark Haefele, director of investments, UBS Global Wealth Management, commented.

According to the latest data, inflation in the eurozone in May rose to 2 percent from 1.6 percent in April.

(PAP)