European Stocks Close Slightly Higher

European markets closed marginally higher after a cautious session on Tuesday as investors digested the latest batch of economic data from the euro area and looked ahead to U.S. inflation data, due on Thursday.

Although optimism about global economic recovery continued to underpin sentiment, activity in the markets remained somewhat subdued as investors felt any notable surge in U.S. inflation might prompt the Federal Reserve to consider discussions on tapering its bond buying program.

The pan European Stoxx 600 edged up 0.1%. The U.K.’s FTSE 100 gained 0.25% and France’s CAC 40 moved up 0.11%, while Germany’s DAX ended lower by 0.23%. Switzerland’s SMI climbed 0.23%.

Among other markets in Europe, Austria, Finland, Greece, Iceland, Ireland, Netherlands and Sweden moved higher.

Czech Republic, Norway, Poland, Portugal, Russia and Spain ended weak, while Belgium, Denmark and Turkey ended flat.

In the UK market, Thungela Resources (TGA.TO) soared nearly 30%. Intermediate Capital Group gained 5.9%. Flutter Entertainment, Intercontinental Hotels, Whitbread, Entain, Just Eat Takeaway, Smith DS, Schroders, Antofagasta and Ocado Group gained 2 to 4%.

Aviva rose sharply after activist investor Cevian Capital said it had built up a near 5% stake in the insurer.

British American Tobacco shares moved higher after the company upgraded its 2021 revenue guidance, citing strong pricing and volumes for combustible tobacco.

Taylor Wimpey, Smith & Nephew, IAG, Melrose Industries, Lloyds Banking Group, Barratt Developments, M&G, Admiral Group and Barclays Group lost 1 to 2%.

In France, Unibail Rodamco gained nearly 6%. Accor climbed about 3%. Technip, Legrand, Dassault Systemes, Kering, Hermes International and Schneider Electric also posted notable gains.

Faurecia, Valeo, Credit Agricole, Societe Generale, BNP Paribas, Veolia and Sanofi lost 1 to 3%.

In the German market, Thyssenkrupp, Merck, Vonovia, RWE, E.ON and SAP closed with sharp to moderate gains, while Covestro, Volkswagen, Daimler and Lufthansa ended sharply lower.

In the Swiss market, Roche Holdings shares gained about 0.75% after the company said it has received CE mark for its SARS-CoV-2 Antigen Self-Test Nasal for at-home testing. The test provides results in as little as 15 minutes.

In economic news, data from Destatis showed German industrial output dropped 1% on a monthly basis in April, reversing a revised 2.2% rise in March. Economists had forecast an increase of 0.5%.

German economic sentiment weakened unexpectedly in June but financial market experts’ assessment of current situation improved sharply, survey data from the ZEW – Leibniz Centre for European Economic Research showed.

The ZEW Indicator of Economic Sentiment dropped to 79.8 in June from 84.4 in the previous month. The score was forecast to rise to 86.0.

Assessment of the current economic situation improved significantly with the index rising to -9.1 from 40.1 a month ago.

Revised data from Eurostat showed GDP in the 19 countries sharing the euro contracted 0.3% sequentially for a 1.3% annual decline. That is a modest upside revision compared with the previous estimates of -0.6% and -1.8%, respectively.

France’s foreign trade deficit increased slightly in April, data published by customs office revealed. The trade deficit widened to EUR 6.24 billion in April from EUR 6.14 billion in March. In the same period last year, the shortfall was EUR 4.54 billion.

Both exports and imports grew 1.6% each on a monthly basis in April. Year-on-year, exports advanced 17.4% and imports climbed 21%.

U.K. retail sales increased notably in May driven by the relaxation of restrictions related to the coronavirus pandemic, data from the British Retail Consortium showed. Total sales grew 10% year-on-year in May and like-for-like sales climbed 23.7%.

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