The pan-European STOXX 600 closed up 0.5%, with all major regional bourses also ending in positive territory.
Data showed that U.S. consumer prices recovered as expected in July, but the trend remained consistent with subsiding inflation, after a slowdown in producer prices a day earlier had stoked hopes that the Federal Reserve would soon cut interest rates.
“The CPI report gives the Fed the green light to cut rates at its next decision on Sept. 18,” said Bill Adams, chief economist at Comerica Bank.
Comerica expects the Fed to cut its federal funds rate target by 0.25 percentage points at its next four decisions in September, November, December and January 2025. Investors are expecting the Fed to cut rates as early as September after fears of a U.S. recession weighed on global risk assets earlier this month. The travel and leisure sub-index jumped 10.5% after Flutter, the world’s largest online gambling company, raised its full-year outlook, marking its biggest one-day gain on record at 3%. Shares in the British gambling technology company rose 14% on news that the Irish gambling giant has entered talks to buy Playtech’s Italian unit Snytec.
In the euro area, second-quarter data showed that euro area GDP grew 0.3% quarter-on-quarter and employment increased 0.2% quarter-on-quarter.
Moreover, French consumer prices rose 2.7% year-on-year in July, up slightly from the previous month’s preliminary figure.
On the revenue front, Swiss bank UBS rose 5.3% after reporting quarterly profits that were double market expectations.
In addition, shares in German insurer Talanx rose nearly 7% after the results helped send a financial stock index to its highest level in nearly two weeks.
Shares in Straumann rose 13% after the dental implant maker said it was selling its Dr. Smile aligner business and raised its full-year outlook.
Among them, ThyssenKrupp slumped 6.3 percent after reporting a quarterly net loss, while Carlsberg slid 4 percent on poor prospects for the Chinese market.
Of the STOXX 600 companies that reported second-quarter profits, 54.8% beat expectations, compared with the typical rate of 54%.
However, gains were held back by a decline in basic resources stocks.
Utilities shares also fell, with RWE down nearly 6 percent as the company failed to allay concerns about reports it might buy a U.S. gas-fired power plant operator.
