European Stocks Close Higher On Encouraging Economic Data

(RTTNews) - European stocks shrugged off a mid-session setback and closed higher on Tuesday thanks to strong economic data from Germany and a surprise rate cut decision by the People's Bank of China.

Strong U.S. inflation and labor data contributed as well to the positive sentiment in European markets.

Investors looked ahead to the Federal Reserve's monetary policy announcement, due on Wednesday, and the European Central Bank's policy move.

Data from Destatis showed German consumer price inflation climbed 6.1% annually in May, slower than the 7.2% rise in April. That was in line with the flash data published on May 31. Further, this was the weakest inflation since March 2022, when prices had risen 5.9%.

Similarly, EU-harmonized inflation slowed to 6.3% from 7.6% in April, as estimated.

The German ZEW headline number showed that the economic sentiment index unexpectedly improved to -8.5 from -10.7 seen in May. Analysts had expected a score of -13.0.

In China, the People's Bank of China cut its seven-day reverse repo rate by 10 basis points in a bid to restore market confidence and prop up slowing economic growth.

The pan European Stoxx 600 climbed 0.55%. The U.K.'s FTSE 100 gained 0.32%, Germany's DAX ended 0.83% up, and France's CAC 40 moved up 0.56%, while Switzerland's SMI advanced 0.23%.

Among other markets in Europe, Austria, Belgium, Finland, Greece, Ireland, Netherlands, Norway, Portugal, Russia and Sweden ended higher.

Iceland, Poland, Spain and Turkiye closed weak, while Czech Republic and Denmark ended flat.

In the UK market, Glencore rallied 5.3% and Antofagasta surged about 3.5%. Anglo American Plc, Rio Tinto, Flutter Entertainment and Weir Group gained 2.2 to 2.75%.

Entain, Fresnillo, Smiths Group, Endeavour Mining, IAG, Frasers Group, Johnson Matthey, Bunzl, Spirax-Sarco Engineering, Natwest Group and Intertek Group also posted strong gains.

Admiral Group ended more than 5% down. Persimmon drifted down 4.4%, while Segro, Taylor Wimpey, Barratt Developments, Unite Group, British Land Company and BT Group lost 2 to 3.7%.

In the German market, Covestro surged 2.8%. Zalando, Adidas, Siemens, Deutsche Post, Commerzbank, Daimler Truck Holding, BMW, Infineon, Puma, SAP, Continental, Deutsche Boerse, Mercedes-Benz, Volkswagen and BASF gained 1 to 2.8%.

In Paris, Teleperformance climbed 3.8% and Saint Gobain gained about 3.1%. Legrand, Stellantis, ArcelorMittal, Vivendi, Thales and Michelin gained 1.5 to 2.1%.

Sanofi, Orange, Bouygues, Carrefour, Veolia and Unibail Rodamco ended notably lower.

In U.S. economic news, data from the Labor Department showed the consumer price index inched up by 0.1% in May after climbing by 0.4% in April. Economists had expected prices to tick up by 0.2%.

Excluding food and energy prices, core consumer prices rose by 0.4% in May, matching the increase seen in each of the two previous months as well as economist estimates.

The Labor Department also said the annual rate of consumer price growth slowed to 4% in May from 4.9% in April. Economists had expected the pace of growth to slow to 4.1%. The year-over-year growth in May marked the smallest annual increase since the period ending March 2021.

The annual rate of core consumer price growth also slowed to 5.3% in May from 5.5% in April, in line with expectations.

The data has added to optimism about the Federal Reserve pausing its recent interest rate increases when the central bank announces its monetary policy decision on Wednesday.