European shares end volatile session higher, inflation concerns limit gains 

By Twesha Dikshit and Johann M ‌Cherian

May 18 (Reuters) - European shares ​ended ​Monday's volatile session higher, bouncing back from declines in the previous week, as investors weighed developments in the Middle East amid rising concern over oil price-driven inflation and its impact ‌on global economic growth.

The pan-European STOXX 600 finished up 0.5% at 610.17 points, recovering ⁠from a nearly 0.9% drop earlier in the session. The index logged its first weekly decline since mid-April on Friday.

Despite the day's ‌gains, a stalemate between the U.S. ‌and Iran and the continued closure of the vital Strait of Hormuz left investors worried about the scale and scope of energy-induced inflation pressures and their effect on global economic growth.

Bets that central ​banks would soon hike interest rates led traders to sell bonds. In Europe, Germany's benchmark 10-year bond yield hit a 15-year peak, with interest rate futures hinting that the European Central Bank could raise ⁠borrowing rates by at least 50 basis points by the end of the year.

European and world bond yields are increasing "due to rising inflation expectations, ​because energy prices have started to bite and we do not have any material progress in the Strait of Hormuz," said Ipek Ozkardeskaya, senior market analyst at ​Swissquote Bank.

"Given that the world's oil reserves are plunging, we ‌know that we are facing scarcity in the coming months."

Markets also weighed a report saying the U.S. had accepted a temporary waiving of sanctions on Iranian crude, ⁠even as Tehran sent a new peace proposal with terms that appeared similar to offers that Washington had previously rejected, although an official said the U.S. has softened its stance on some issues.

The media index led sectoral gains with a ⁠2.5% rise. Publicis added 6% after the advertising group agreed to acquire U.S. data collaboration company LiveRamp in an all-cash ​deal of about $2.2 billion.

Germany's DAX index led gains among regional bourses, with Deutsche Boerse up 4.6% after the stock exchange operator said it welcomed investor TCI taking a stake, a move that marks the hedge fund's return as a large investor ‌in the company.

Commerzbank ended 1.5% lower after the lender formally rejected an offer by Italy's UniCredit.

Ryanair ended nearly 5% higher after posting a record annual profit ‌and saying the risk of jet fuel shortages has all but disappeared. However, the airline warned that consumer anxiety amid ⁠the war was likely to wipe out ‌any growth in the peak summer ​months.

Sonova rose 7.9% after the world's biggest hearing-aid maker forecast higher annual sales and earnings.

(Reporting by Twesha Dikshit and Johann M Cherian in Bengaluru; Editing by Harikrishnan Nair and ‌Jonathan Ananda)

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