By Sudeshna Ghoshal, Medha Singh and Ragini Mathur
Sept 3 (Reuters) - European stocks rose on Thursday after three straight sessions of losses, as a global bond selloff eased and investors looked ahead to U.S. economic data for clues on the Federal Reserve's next policy moves.
The pan-European STOXX 600 was up 0.5% at 649.1, recovering from one-month lows hit on Tuesday. Regional indexes were also mostly higher.
Soitec jumped 10.3% to the top of the STOXX 600 index after the French chip materials maker
raised its revenue growth outlook for the second quarter of 2027 to 50% year-on-year from its previous forecast of 30%.
Markets had come under pressure in recent days as the escalation of the Iran war lifted oil prices and amplified concerns over persistent inflation, rising government debts and tighter monetary policy.
European equities are particularly exposed to higher oil prices due to the region's reliance on energy imports.
Oil prices eased on Thursday but remained above $95 a barrel, while euro zone bond yields retreated from multi-year highs. [O/R] [GVD/EUR]
"Until there is a complete stop to attacks from both sides it is hard to see commodity prices pull back in a meaningful way, or bonds stage a long-term recovery as central banks will remain wary about inflation risks," Kathleen Brooks, research director at XTB, said.
The latest survey showed growth in the euro zone's dominant services industry slipped to a two-month low in August, though solid, broad-based demand kept overall private sector activity steady.
Traders are nearly certain the European Central Bank will raise borrowing costs to 2.5% at its policy meeting next week and deliver two additional quarter-point rate hikes by mid-2027.
"Even though Brent will fluctuate, the actual product people use is at the highs of March and April, and this will have an impact," Ricardo Castillo, head of investments at Mirabaud Group, said.
"I think in Europe, it's part of why we believe the ECB, even though growth is not that huge, will probably have high rates," he added.
Friday's U.S. non-farm payrolls report will be closely watched for fresh signals on the Fed's policy path, after hawkish comments from Chair Kevin Warsh last week prompted traders to raise bets on further rate hikes.
Among other stocks, WPP and Publicis rose 5.6% and 4.4%, respectively, after a media report said Publicis had won PepsiCo's media account.
Luxury stocks led sectoral losses, falling 2% as investors grew more cautious about the outlook for the industry's recovery. LVMH fell 1.8%, while Hermes and Gucci-owner Kering dropped about 2% and 3%, respectively.
Commerzbank gained 2.3% after the German lender announced a new share buyback programme of up to €1.2 billion ($1.39 billion).
Deutsche Telekom added 1.1% after Elliott built a stake in the company.
(Reporting by Sudeshna Ghoshal, Medha Singh and Ragini Mathur in Bengaluru; Editing by Nivedita Bhattacharjee, Rashmi Aich and Andrew Heavens)
