European Stocks Close Higher On U.S. Debt Deal News, Eurozone Inflation Data

European stocks closed on a strong note on Thursday with investors cheering signs of progress on the U.S. debt ceiling deal, encouraging manufacturing data from China and dovish comments from Fed officials hinting at a pause in interest-rate hikes.

The U.S. House of Representatives approved a debt ceiling and budget cuts package on Wednesday. The bill now heads to the Senate, with passage expected by the weekend.

Flash data showing a sharp decline in eurozone inflation, an upward revision in euro area manufacturing activity, and a jump in German retail sales helped as well.

The pan European Stoxx 600 climbed 0.78%. The U.K.’s FTSE 100 gained 0.59%, Germany’s DAX surged 1.21% and France’s CAC 40 gained 0.55%, while Switzerland’s SMI rose 0.7%.

Among other markets in Europe, Austria, Belgium, Finland, Iceland, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden and Turkiye closed higher.

Czech Republic, Denmark and Greece ended weak.

In the UK market, Fresnillo surged more than 4.5%. B&M European Value Retail, Melrose Industries, Anglo American Plc, Prudential, Antofagasta and Convatec Group climbed 3 to 4%.

Beazley, Rio Tinto, Rolls-Royce Holdings, United Utilities, Centrica, Johnson Matthey, BP, Airtel Africa, BAE Systems and Persimmon gained 1.5 to 2.5%.

National Grid and Ocado Group both ended lower by about 4.5%. Auto Trader Group and Severn Trent lost 3.4% and 2.4%, respectively.

In the German market, Hannover Rueck, Sartorius, Infineon, Siemens, Allianz and HeidelbergCement gained 2 to 2.6%.
Munih RE, Continental, BMW, Deutsche Telekom, Siemens Energy, Mercedes-Benz, Deutsche Bank, Symrise and MTU Aero Engines also closed notably higher.

Zalando dropped more than 2%. Vonovia ended 1.1% down. Adidas and Bayer posted modest losses.

In Paris, Capgemini, STMicroElectronics, Airbus Group and ArcelorMittal rallied 2.5 to 3%.

Thales gained about 2.1%. Legrand, Saint Gobain, Safran, Stellantis, AXA, TotalEnergies, Alstom and Publicis Groupe gained 1 to 2%.

Essilor, LVMH, Eurofins Scientific, Unibail Rodamco and Sanofi lost 0.7 to 1.1%.

In economic news, Eurozone inflation eased sharply to 6.1% in May, a 15-month low, largely due to a fall in energy prices, flash data from Eurostat showed.

Data from Destatis showed Germany’s retail sales rose by a real 0.8% on a monthly basis in April, reversing a 1.3% drop in March.

Euro area manufacturing activity contracted for the second straight month in May on falling production and new orders but firms continued to take additional staff, the purchasing managers’ survey results showed.

The HCOB manufacturing Purchasing Managers’ Index fell to 44.8 in May from 45.8 in April, data from S&P Global showed. But the reading was above the flash score of 44.6.

In the U.K, manufacturing downturn worsened in May, as output, new orders and employment all fell at faster rates amid headwinds of weak domestic and foreign market conditions and client de-stocking, survey results from S&P Global revealed.

UK house prices declined the most since 2009 in May, with the house price index sliding 3.4% from a year ago, the Nationwide Building Society said in its report. The drop followed a 2.7% decrease in April.

Switzerland’s trade surplus decreased at the start of the second quarter as exports fell faster than imports, data from the Federal Customs Administration showed on Thursday. The trade surplus shrank to CHF 2.2 billion in April from CHF 3.1 billion in March.