The main Spanish stock market index extended gains on Monday, with a moderately optimistic climate in the European markets as the feared energy crisis was overcome for the time being, while waiting to see if the next macroeconomic data confirm this trend.

In a session in which most of the Asian stock exchanges are closed for vacations, relief was felt at the 60% drop in gas prices in Europe since December.

However, the fear of interest rate tightening continues to weigh on the markets, which this week will be watching the PMI surveys to try to predict the direction of the cost of debt.

"Our market view remains cautious, especially after the recent rally in equities and fixed income, in a scenario of high uncertainty," said Renta 4 in a daily analysis note to clients.

"Although the latest data show some moderation in inflation, it remains at very high levels and the ceiling to inflation has yet to be confirmed, especially in core inflation in Europe. In this regard, we believe that such high inflation will cause rates to continue to rise, with no rate cuts in 2023, in addition to the materialization of the expected deterioration of the economic cycle and its impact on business results yet to be seen," it said.

The latest Reuters poll of analysts points to the European Central Bank raising rates by 50 basis points in both February and March to a maximum of 3.25%, while the US Federal Reserve is now expected to raise rates by 25 basis points next week.

On Monday, markets will be watching for speeches from ECB President Christine Lagarde as well as central bank Governing Council member Fabio Panetta.

Around a quarter of the S&P 500 will report corporate results this week, while in Spain, Sabadell bank will publish its results on Thursday.

In terms of macroeconomic data, the key date will be Tuesday, when January PMIs for the eurozone and the United States will be released. Before that, on Monday, the markets will try to take the pulse with the preliminary January consumer confidence data for the eurozone.

In this context, at 08:05 GMT on Monday, the selective Spanish stock market index Ibex-35 was up 25.20 points, or 0.28%, to 8,943.40 points, while the FTSE Eurofirst 300 index of large European stocks was up 0.21%.

In the banking sector, Santander rose 0.45%, BBVA gained 1.15%, Caixabank advanced 0.63%, Sabadell gained 1.24%, Bankinter gained 0.22%, and Unicaja Banco rose 0.67%.

Among the large non-financial stocks, Telefónica gained 0.62%, Inditex advanced 0.18%, Iberdrola gained 0.51%, Cellnex fell 2.77%, and the oil company Repsol lost 0.03%.

(Information by Flora Gómez; edited by Tomás Cobos)