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European stocks closed higher last Friday as investors digested economic data from the region including a preliminary U.K. second-quarter GDP reading, July inflation prints out of France, Spain and Italy, and euro zone industrial production for June.
Camilla Cerea | Bloomberg via Getty Images
LONDON — European stocks were higher Tuesday, regaining some positive momentum after last week’s volatility.
The Stoxx 600 index, the regional benchmark, was 0.23% higher at 9:08 a.m. London time. Utilities led gains, up 0.73%, while travel stocks slipped 1.2%.
European stocks closed mixed on Monday as forthcoming U.S. and U.K. inflation data dominated investor attention.
U.K. wage data released by the Office for National Statistics on Tuesday showed that pay excluding bonuses grew 5.4% year-on-year between April and June — the lowest rate in two years.
The unemployment rate fell to 4.2% from 4.4%, the ONS also said, while economists polled by Reuters had expected an increase of 4.5%.
Jack Kennedy, senior economist at the Indeed job site, said the figures showed the labor market remained “fairly tight” and that wage pressures were softening only gradually, potentially limiting the level of monetary easing the Bank of England is able to deliver this year.
U.K. inflation data, due on Wednesday, will be the first print since the BOE cut interest rates by 25 basis points. After two months at 2%, economists polled by Reuters expect the headline rate to tick higher, to 2.3%.
Money markets are currently pricing in in a high probability of further rate cuts amounting to 50 basis points this year. The Bank of England’s key rate currently sits at 5%.
The British pound was higher following the labor market data, trading up 0.3% against the U.S. dollar at $1.2805 and 0.3% higher against the euro at 1.1722.
Investors around the world will also be analyzing the latest U.S. inflation data this week, in order to get a better picture of the state of health of the world’s largest economy.
The U.S. producer price index, a measure of wholesale prices, is published on Tuesday and the consumer price index for July will be released Wednesday, with investors assessing whether the data could prompt the U.S. Federal Reserve to begin cutting rates in September.
Asia-Pacific markets were mixed overnight after a choppy session in the U.S. on Monday.
U.S. stock futures were little changed Monday night as investors await this week’s key inflation data.
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