Europe close: Stocks rise after US producer price data, French names lead

European shares were higher on Friday, with sentiment buoyed by inflation data that economists said presaged a further slowdown in price pressures, thus raising hopes of a rate cut in September.

The pan-European Stoxx 600 index was up 0.88% to 524.08.

France's CAC 40 outperformed the Stoxx, trading up by 1.27% to 7,724.32, while the German Dax was ahead by 1.15% to 18,748.18.

Euro/dollar was 0.33% higher alongside at 1.0902.

US producer price data for June came in ahead of forecasts, but the details of the report pointed to a slowdown in the core price deflator for personal consumption expenditures, the Fed's preferred price gauge.

Indeed, for economists at Capital Economics, not only was a rate cut in September likely, but also one in July was no longer off the table.

To take into account however, for some strategists the actual start of rate cuts could signal the start of weakness in the stock market.

In equity news, Sweden’s Lifco surged after quarterly earnings pleased investors.

Addtech hit a record high and was up more than 16% after the Swedish technical solutions firm said its outlook was favourable and overall customer activity is stable at a high level.

Ericsson rose 4% after the Swedish telecom equipment maker reported a smaller-than-expected 7% drop in second-quarter sales.

EMS Chemie slipped 5% as the Swiss nylon manufacturer cut annual sales guidance, while Axfood fell to the bottom of the Stoxx as quarterly earnings were hit by costs associated with operational disruptions and restructuring of logistics.

Norwegian Air took off after reporting second-quarter core earnings above market expectations despite slightly lower demand impacting ticket prices, as the budget airline said it improved its cost level and cash flow.