European carbon prices rebounded on Monday, recovering part of last week’s losses despite continued weakness in energy markets. The benchmark EUA Dec’26 contract was last trading at €87.65 per tonne, up 1.27% on the day.

Monday’s gains were supported by a strong auction performance, with the sale of 2.8 million allowances clearing at a premium to the secondary market. The auction attracted a cover ratio of 1.74, above this year’s daily average of 1.64, suggesting robust demand and renewed buying interest despite recent weakness in carbon prices.

Bullish sentiment was further supported by renewed optimism over a potential EU–UK ETS linkage. According to a Bloomberg report published over the weekend, negotiations to reconnect the two carbon markets are nearing completion, with an agreement potentially set to be announced at the EU–UK summit on 20 November.

Most key provisions, including emissions caps, supply controls and free allocation, have reportedly been agreed, with financial derivatives remaining the main outstanding issue. The prospect of closer market integration and improved liquidity provided additional support to EUA prices, helping the market recover despite continued weakness in European gas prices.

The contrast with European gas markets was particularly striking on Monday, as the TTF front-month contract posted a daily loss of 3.61%, slipping below €80/MWh for the first time in a month and extending its decline to more than 23% from the nearly four-year high of €104.36/MWh reached on 30 October.

By Tuesday morning, both markets were trading broadly steady, although EUAs remained marginally in positive territory while gas prices stayed in the red. The continued divergence suggests that carbon-specific catalysts are helping insulate EUA prices from bearish energy-market fundamentals.