European stocks rise on rate outlook

The Stoxx 600 index edged up only 0.29% to 510.02, after a decline during the earlier session

European stocks rose on Wednesday, as investors evaluated how a surprise decline in inflation might affect the short-term outlook for interest rates.

Stock market indices across Frankfurt, Paris, Milan and Madrid all put in modest gains.

The Stoxx 600 index edged up only 0.29% to 510.02, after a decline during the earlier session.

However, the pan-European benchmark continues to trade near its record closing high of 512.67 touched last week.

Analysts at Barclays on Wednesday raised their year-end projections for the Stoxx 600 to 540, from 510 earlier.

Data released early on Wednesday showed that inflation in the Eurozone unexpectedly slowed in March, with the core rate declining to its lowest in over two years, as price pressures in the single-currency region continue to drop.

The YoY change in the eurozone's harmonised consumer price index (CPI) dropped to 2.4% last month, from 2.6% in February, as per Eurostat, surprising economists who had pencilled in no change. This was the same rate recorded in November 2023, which was the lowest level seen since July 2021.

The core rate – which excludes volatile items such as food and energy – also dropped, to 2.9% from 3.1%, coming in under expectations of 3.0% and the lowest reading since February 2022.

Rabobank said the conditions for an interest-rate cut by the European Central Bank in June were "ripening".

London-listed engineer Renishaw plunged 3% after Germany’s Siemens confirmed it was not planning to make an offer for the firm.

Zurich-based reinsurer Swiss Re was in the red by 4% as markets gave a muted reaction to news that the head of its Corporate Solutions unit will succeed long-standing chief executive Christian Mumenthaler.