Spain's Ibex-35 stock index extended gains on Wednesday to 14-month highs as optimism grows in European markets as the outlook for the eurozone economy softens.

As energy and power companies prepare for another strong earnings season, rate hikes are expected to favor banking and insurance stocks.

Barclays analysts note that downside risks to corporate earnings are limited by the reopening of China and a lower impact from stagflation in Europe.

In the domestic stock market, the travel and tourism sector was catapulted to the top of the Ibex on Wednesday after Ryanair announced that it sees no signs of recession, following two weeks of record bookings in January and a recovery in British demand.

Spain's selective Ibex-35 stock market closed up 42.90 points on Wednesday, up 0.48%, to reach 8,933.30 points, its highest level since November 17, 2021.

The FTSE Eurofirst 300 index of large European stocks rose 0.22%.

In the banking sector, Santander rose 0.87%, BBVA scored 0.44%, Caixabank advanced 1.98%, Sabadell gained 0.23%, and Unicaja Banco lost 0.83%.

Among the large non-financial stocks, Telefónica fell 1.57%, Inditex advanced 0.47%, Iberdrola dropped 0.92%, Cellnex gained 1.87%, and the oil company Repsol rose 1.88%.

(Information by Flora Gómez)