Europe midday: Shares extend US rate hopes, China stimulus

European shares extended gains on Tuesday amid hopes that US data could show inflation slowing and boost hopes for an end to interest rate rises and China's move to help property developers by pressuring lenders to extend outstanding short-term loans.

The pan-European Stoxx 600 index was up 0.41% with all major bourses higher. US futures were also up ahead of domestic inflation data on Wednesday that could signal a further moderation in price pressures and boost hopes for an end to the Federal Reserve's tightening cycle.

Meanwhile, The People's Bank of China, the country's central bank. and the National Financial Regulatory Administration, said that some loans would be extended for a year, including trust loans due by the end of 2024.

The PBoC and NFRA said the goal was to aid developers in delivering homes already under construction in the face of flagging demand.

In other economic news, the rise in German inflation last month was confirmed by the statistics office, breaking a run of declines.

Other data released in Europe's biggest economy showed business sentiment deteriorated more than expected in July, according to a survey released on Tuesday by the ZEW Center for European Economic Research in Mannheim.

The headline ZEW investor expectations index fell to -14.7 from -8.5 in June, coming in below consensus expectations for a reading of -10.5. The current situation index edged down to -59.5 from -56.5, versus consensus expectations of -60.0.

Oil prices edged higher as traders focused on supply cuts by the world's biggest oil exporters Saudi Arabia and Russia and a weaker dollar. Prices had eased 1% on Monday on higher expectations that further U.S. interest rate hikes are coming and as investors booked profits after last week's 4.5% rise.

"In the United States, inflation expectations have dropped sharply with consumers are far less downbeat than they were about where prices are heading, which is likely to buoy spending ahead. Inflation expectations fell by 0.3% to 3.8%, the lowest reading since April 2021, according to the study by the Federal Bank of New York," said Hargreaves Lansdown analyst Susannah Streeter.

"It comes ahead of the key CPI inflation figure due out tomorrow, but already sentiment has been buoyed on Wall Street by comments from Fed policymakers indicating the central bank was near the end of the tightening cycle. This also helped lift oil prices, on expectations of higher demand amid cuts in supply from Russia and Saudi Arabia.’’

In equity news, Daimler Truck shares rose as the company raised its profit and revenue guidance due to an easing of supply chain constraints and stronger demand in its core markets.

Chip company Nordic Semi fell after half-year results. Commercial property firm British Land gained as it said it was performing strongly despite the weak UK economy.

Energy firm Centrica edged ahead after signing a massive $8bn LNG supply agreement.

Shares in Kingspan surged as the building insulation giant said it was expecting to post a “record” profit for the first half of 2023.

Reporting by Frank Prenesti for Sharecast.com