European Shares Extend Gains As Inflation Worries Ease

European stocks edged higher on Thursday, with China stimulus hopes and expectations that the Federal Reserve will soon halt interest rate hikes helping underpin sentiment.

Investors were also reacting to remarks from Bank of Italy governor Ignazio Visco that the European Central Bank is “not very far” from a peak in interest rates following a series of increases.

In economic releases, Eurozone industrial output rose less than expected in May, raising concerns that the recovery in the manufacturing sector is losing momentum.
Eurostat said that output rose 0.2 percent month-on-month, down from 1.0 percent previous reading.

Separate data showed the U.K. economy contracted less than expected in May.
Real GDP decreased 0.1 percent on a monthly basis, reversing April’s 0.2 percent growth. However, this was slower than economists’ forecast of 0.3 percent decline.

The pan European STOXX 600 rose 0.4 percent to 460.58, extending gains for the fifth straight session.

The German DAX edged up 0.4 percent, France’s CAC 40 added half a percent and the U.K.’s FTSE 100 was up 0.3 percent.

In corporate news, Italy’s electricity and gas operator Enel rose 1 percent.
The company said that its subsidiary Enel Green Power S.p.A. has agreed to sell 50 percent of its two entities namely Enel Green Power Australia Pty Ltd and Enel Green Power Australia Trust to Inpex Corporation (IPXHY) for around 400 million euros.

Housebuilder Barratt Developments slumped over 5 percent in London after it warned of a challenging environment and a further slowdown in demand due to “significant macro-economic headwinds.”

Persimmon and Berkeley Group both fell around 2.4 percent while Taylor Wimpey gave up 3.8 percent.

Kenmare Resources fell more than 2 percent after lowering its full-year production guidance.

Casino Group shares plunged 5 percent in Paris. The cash-strapped retailer said it estimates like-for-like sales for the second quarter, in France, to be down 6.6 percent reflecting lower hyper and supermarkets sales on a like-for-like basis due to price cuts.

BASF fell about 1 percent. The German chemical company cut its full-year outlook after preliminary net income for the second quarter of 2023 declined to 499 million euros from 2.09 billion euros in the previous year.

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