Europe close: Stocks end higher but off best levels after US CPI report

European shares pushed further ahead on Wednesday as investors digested slightly weaker-than-expected US inflation data for March that led many economists to say that the Federal Reserve would likely push ahead with another 25 basis point interest rate hike at its next meeting.

But not everyone was in agreement with one J.P. Morgan analyst telling Bloomberg TV that he "knew" that the Fed should not hike, although what it would finally choose to do was a close call.

"Stock markets rallied on Wednesday, with several European indices such as the Dax 40 briefly trading in 1 1/4 year highs and the CAC 40 in all-time record highs ahead of the US March CPI release which came in lower than expected at 0.1% month-on-month and 5% year-on-year (YOY)," said Axel Rudolph, senior market analyst at IG.

The pan-European Stoxx 600 index was up 0.13% at 462.38 with all the major regional bourses higher alongside.

Asian shares had closed mixed and Wall Street amid a cautious mood, due at least in part to tensions around Taiwan.

According to analysts in the City, investors were also looking ahead to the release, after the close of markets, of the minutes of the Federal Reserve's last meeting in March, when it raised rates by 25 basis points.

In equity news, shares in Volvo topped the Stoxx 600 leaderboard after the truck maker reported record first-quarter profit on higher revenue and margins.

Shares in Germany's Merck slumped after the US Food and Drug Administration had paused the initiation of new patients on its multiple sclerosis evobrutinib drug.

Investors were awaiting first-quarter earnings from French luxury goods group LVMH after markets close to see how demand from China has fared after Covid-19 restrictions were lifted in that country late last year.