European Stocks Pare Early Gains, Close Mostly Lower

(RTTNews) - Despite U.S. and Chinese officials announcing an agreement in principle on a framework to ease trade disputes, European stocks failed to hold early gains and closed mostly lower on Wednesday, with the mood turning cautious as the plan is subject to approval by the presidents of the two nations.

Without specifying the terms of the framework, U.S. Commerce Secretary Howard Lutnick indicated that both sides agreed to lift export controls on key goods and technologies.

Investors also digested U.S. consumer price inflation data, and a few corporate earnings updates from the region.

The pan European Stoxx 600 ended down 0.27%. Germany's DAX closed 0.16% down, and France's CAC 40 drifted down 0.36%. The U.K.'s FTSE 100 gained 0.13% with investors digesting the nation's multi-year spending review. Switzerland's SMI ended lower by 0.29%.

Among other markets in Europe, Austria, Greece, Norway, Russia and Turkiye closed higher.

Belgium, Czech Republic, Denmark, Finland, Iceland, Netherlands, Poland, Portugal, Spain and Sweden ended weak. Ireland closed flat.

In the UK market, Fresnillo gained more than 3.5%. Prudential, BT Group, British American Tobacco, Games Workshop, Rolls-Royce Holdings, Weir Group, Diploma and Standard Chartered climbed 1 to 2.7%.

Ricardo Plc shares soared nearly 27% after the engineering group agreed to a £281 million takeover by Canadian consultancy WSP Global.

Antofagasta, Anglo American Plc., JD Sports Fashion, Marks & Spencer, Unite Group, Diageo, Easyjet and Associated British Foods lost 1 to 2.6%.

Ibstock Plc shares plunged 14.7%. The building materials manufacturer has warned of margins pressure despite reporting higher first-half sales.

UK Chancellor Rachel Reeves outlined departmental budgets through 2027, including a commitment to raise defence spending to 2.5% of GDP and an additional £30 billion for the NHS.

In the German market, Bayer gained nearly 4%. Siemens Energy climbed about 3.1%. Rheinmetall, RWE, Heidelberg Materials and Deutsche Bank also closed notably higher.

Puma ended down by about 2.7%. Deutsche Telekom, Brenntag, Infineon, Adidas, Henkel, Deutsche Boerse, Fresenius Medical Care, Volkswagen and BASF lost 1 to 1.7%.

In the French market, Publicis Groupe, STMicroElectronics, Eurofins Scientific, Engie and ArcelorMittal gained 1 to 2.5%.

Carrefour and Schneider Electric both closed lower by more than 2%. Stellantis, Dassault Systemes, Pernod Ricard, Edenred, Michelin, L'Oreal and Sanofi ended down by 1 to 1.4%.

In economic news, A measure, based on the collective bargaining agreements in the euro area, suggested that negotiated wage growth is set to ease significantly this year, the European Central Bank said on Wednesday, which adds to expectations of inflation staying near the 2% target.

The ECB wage tracker, which covers active collective bargaining agreements in Eurozone, suggested that negotiated wage growth with smoothed one-off payments is set to drop to 3.1% this year from 4.7% last year, a monthly survey by the European Central Bank revealed. The growth rate for this year is unrevised from the previous release in late April.

The headline indicator also suggested wage growth of 1.7% in the fourth quarter this year, which is slightly above the 1.6% signaled in April. In the fourth quarter of 2024, the euro area wage growth peaked at 5.4%.

Data from the Labor Department showed the U.S. consumer price index inched up by 0.1% in May after rising by 0.2% in April. Economists had expected another 0.2% increase.

Meanwhile, the report said the annual rate of consumer price growth accelerated to 2.4% in May from 2.3% in April. The annual rate of consumer price growth was expected to speed up to 2.5%.

Core consumer prices still crept up by 0.1% in May after edging up by 0.2% in April. Economists had expected core consumer prices to rise by another 0.2%.