European shares near two-week highs on Fed rate cut hopes
The pan-European STOXX 600 index rose 0.5%, as of 0904 GMT, trading at its highest since July 31.
Wall Street indexes closed at record highs on Tuesday after data showed a mild inflation bump in July, offering relief to investors worried about U.S. President Donald Trump's tariffs lifting price pressures.
Traders are currently pricing in a 96% chance of a Fed rate cut in September, according to the CME Group's FedWatch tool.
There is a bit of growing expectation of a rate cut, maybe even a 50-basis-point cut, although that seems unlikely, said Gene Salerno, chief investment officer for UK Wealth Management at UBP.
"Those factors are giving some enthusiasm, but the market might be a bit overexuberant about what they can read into from that."
Closer home, d
ata showed German inflation eased to 1.8% in July, confirming preliminary data, a sign of easing price pressures in Europe's biggest economy.
Leaders from Europe and Ukraine are set to speak to Trump later in the day ahead of his summit with Russian President Vladimir Putin. Trump will host Putin at talks in Alaska on Friday that the U.S. president has said will serve as a "feel-out" meeting in his efforts to end the Russo-Ukraine war.
Defense stocks rose 1.4%, recovering from recent losses amid expectations of an end to the Russia-Ukraine war. Rheinmetall and Renk added 2.9% and 5.4%, respectively.
Renk reported better-than-expected second-quarter revenue with the German tank gearbox maker benefitting from increased European defence spending.
The technology sector climbed 1.4% after falling to a three-month low in the previous session.
Nearly half of the STOXX 600 companies have reported second-quarter results so far, and 54% of them have beat earnings estimates, in-line with the beat rate in a typical quarter, according to LSEG I/B/E/S data.
Glanbia shares jumped to the top of the STOXX 600 index, adding 12.6% after the nutrition supplement maker posted first-half results and said the tariff hit was 'manageable.'
UK insurer Beazley dropped 9.6% after it trimmed its annual premium growth forecast.
Evolution fell 10.6% to the bottom of the STOXX 600 after a Bloomberg report based on a court filing showed the online gambling company's casino games made their way illegally to banned markets.
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