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Aug 15 Reuters European shares hovered near twomonth highs on Monday as signs of a slowing Chinese economy prompted investors to turn to defensive sectors such as healthcare and consumer staples typically seen as immune to business cycles.

The panEuropean STOXX 600 rose 0.3. The benchmark index was trading close to levels needed to recoup all of its June losses when fears about aggressive U.S. interest rate hikes and recession dominated the sentiment.

Healthcare stocks were among the biggest boost to European bourses on Monday.

AstraZeneca rose 2.3 after the drugmaker said its cancer drug, Enhertu, developed with Japan39;s Daiichi Sankyo delayed the progression of a form of advanced breast cancer in previously treated patients. 

Food and beverage rose about 1 to lead gains, while utilities added 0.8.

Those gains helped counter losses in Chinaexposed automakers, oil and miners after the country39;s central bank cut key lending rates in a surprise move to revive demand as data showed the economy unexpectedly slowing in July.

Volatility in Europe is baked in for the rest of the year, given the Ukraine war, China39;s zeroCOVID policy, inflation, and whether central bank hikes manage to tame things to a point where investors feel confident, said Danni Hewson, financial analyst at AJ Bell.

Investors await euro zone flash GDP…