Europe open: Shares up as UK inflation rise boosts rate cut hopes

The pan-regional Stoxx 600 index was up 0.45% at 503.98 in early deals.

Kishida said he would not seek re-election as leader of the ruling Liberal Democratic Party (LDP), saying it needed a "new start", as his poll ratings plunged amid a corruption scandal involving his party, rising living costs and falling yen.

The 67-year-old LDP veteran is expected to step down as PM after the party elects a new leader in September.

In economic news, UK consumer price inflation rose in July for the first time since December, albeit less than expected.

According to figures released on Wednesday by the Office for National Statistics, CPI rose by 2.2%, up from 2% in June and May but coming in below expectations of 2.3%. It is now back above the Bank of England’s 2% target.

The moved sparked optimism that the Bank of England may move to cut interest rates next month.

“UK inflation has not yet been tamed, veering away from target but not by as much as feared. The effects of energy price changes, with bills falling by less than July last year was the main driver upwards,” said Hargreaves Lansdown analyst Susannah Streeter.

“But the Bank of England will be encouraged by the direction of travel for core inflation, which strips out volatile fuel and food prices as it dipped to 3.3% from 3.5%. The pound dropped a little against the dollar from $1.285 to $1.282 as bets increased slightly on further rate cuts this year.”

“However, with prices still more unruly, Bank of England policymakers are still set to sit on their hands in September and are not expected to cut rates until November.”

In equity news, shares in Straumann put a smile on investors faces as the Swiss dental firm lifted guidance and said it was selling its DrSmile aligner business. The stock was up almost 15% in morning trade.

Reporting by Frank Prenesti for Sharecast.com