Europe: Stocks rise on cooling inflation, healthcare boost
EUROPEAN shares ended higher on Monday (Jul 31), helped by gains in healthcare stocks and a report showing eurozone inflation eased further in July, though upbeat growth data tempered optimism about a rate hike pause.
The pan-European Stoxx 600 ended up 0.1 per cent. The index climbed 2 per cent in July, gaining for the second month in a row.
Data showed eurozone consumer prices grew by 5.3 per cent this month versus 5.5 per cent in June, extending a downtrend that started in the autumn. Excluding energy and unprocessed food, prices increased by 6.6 per cent after a 6.8 per cent rise a month earlier.
Another set showed the bloc returned to growth in the second quarter, though Germany, the eurozone’s biggest country, registered no growth and Italy suffered a contraction.
“The news in Europe is a bit more mixed (with) the preliminary data in Italy coming in much weaker than expected, although the eurozone is not doing too badly,” said Andrea Cicione, head of research at TS Lombard.
“The picture is not as encouraging as the US and so the markets are trying to figure out what matters most.”
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Inflation has been on a downtrend in the United States while the economy has also shown resilience, staving off fears of a deep recession and fuelling hopes that the Fed has reached the end of its rate hikes.
Markets have received a further boost this month from speculation that the ECB could also refrain from tightening further as well some upbeat earnings.
The energy sector was up 1.2 per cent as UK-listed oil and gas firms including Harbour Energy strengthened on Britain’s plans to grant new North Sea licences.
Healthcare stocks led gains, with Novo Nordisk up 3.4 per cent as it launched its blockbuster weight-loss drug Wegovy in Germany.
The German DAX ended 0.1 per cent lower, but hovered near record high levels hit recently.
Italy’s FTSE MIB added 0.5 per cent to touch fresh 15-year highs, lifted by the state-controlled defence and aerospace group Leonardo.
Limiting further upside on Monday, Heineken shares slid 8.0 per cent after the world’s second-largest brewer by volume cut its 2023 profit growth forecast as an economic slowdown in Vietnam depressed first-half earnings.
Heineken’s peers Anheuser-Busch InBev and Carlsberg shed over 2 per cent each.
An index of eurozone banks edged up 0.2 per cent after the European Banking Authority’s annual stress test results showed three of 70 banks from the European Union failed to meet binding capital requirements. REUTERS
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