Europe midday: Shares rally as German business sentiment soars
European shares rallied strongly by midday as investors focused on the pandemic recovery and looked beyond any threats to economic stimulus from rising inflation.
The pan-European Stoxx 600 index was up 0.76% with France's CAC 40 outperforming, rising 1%. The UK's FTSE 100 was up 0.36% as the Bank of England held interest rates at the historic low of 0.1% despite concerns that inflation could surge in the wake of the pandemic. Consumer price inflation hit a two-year high of 2.1% in the year to May, exceeding the Bank's 2% target.
German's DAX was up 0.76 as business confidence data showed more optimism. The IFO business climate index rose to 104 in June, up from 102.9 in May, ahead of the 103.6 increase forecast.
"The data also comes following yesterday's upbeat PMI numbers and adds to evidence that the German economy is experiencing a broad-based and robust recovery. Moreover, optimism surrounding the recovery is overshadowing any concerns surrounding supply-chain issues, which have also been reflected in recent data," said OANDA analyst Sophie Griffiths.
Investors were also awaiting new US jobless claims data later in the day, while the US Federal Reserve's annual bank stress test results are scheduled for release after the bell on Thursday.
In equity news, shares in Swiss laboratory instrument maker Tecan Group topped the Stoxx, up 11.6%, after agreeing to buy US medical devices and life sciences instruments group Paramit Corp of the US for $1bn.
Distribution specialist Bunzl rose after the company said said first-half revenue is expected to increase by around 1% at actual exchange rates and 6% - 7% at constant rates as a recovery in its base business, including the food service and retail sectors, was largely offset by an anticipated fall in Covid-related orders.