Europe midday: Stocks push higher as China data boosts basic resources
European stocks were firmly in the black by midday, with basic resources racing ahead following the latest Chinese inflation data.
The benchmark Stoxx 600 index was up 1.5%, Germany’s DAX was 1.2% firmer and France’s CAC 40 was 1.6% higher.
According to figures released earlier by the National Bureau of Statistics, inflation in China slowed in August amid weak demand.
Consumer price inflation declined to 2.5% on the year from 2.7% in July, coming in below consensus expectations of 2.8%. This was driven by a moderation in food price inflation, which dropped to 6.1% from 6.3%.
Meanwhile, producer price inflation fell to 2.3% in August from 4.2% a month earlier, versus consensus expectations of 3.1%. It marked the slowed pace since February 2021.
Core CPI, which excludes food and energy prices, came in at 0.8%, in line with July.
Craig Botham, chief China+ economist at Pantheon Macroeconomics, said: "Further falls in CPI inflation are likely, with demand again choked by tighter zero-Covid restrictions, which will remain in place until the 20th Congress concludes in late October.
"Food and energy inflation should have peaked, based on global prices, and recent interventions in the domestic market. Falling PPI inflation is also likely to show up in goods inflation in the coming months."
Closer to home, EU energy ministers were gathering for emergency talks in Brussels to discuss measures to tackle the energy crisis. European Commission president Ursula von der Leyen has reportedly put forward a number of options, including a price limit on Russian gas, help for cash-strapped companies and a windfall tax on power generators.
Investors were also continuing to mull an unprecedented 75 basis points rate hike by the European Central Bank on Thursday. In a bid to tackle surging inflation, the Bank lifted the key interest rate to 1.25%, as widely expected, and the deposit rate to 0.75% from zero.
It said it now expects inflation to average 8.1% this year, 5.5% in 2023, and 2.3% in 2024. The ECB also slashed its economic growth expectations for the bloc in 2023 to 0.9% from 2.1%.
In equity markets, miners put in a strong performance as copper prices advanced, with the Stoxx 600 basic resources index up 4.3%.