EUROPE MARKETS: European Stocks Gain As Miners Strengthen; Inflation Data On Tap

By Carla Mozee, MarketWatch Features Dow Jones Newswires

Stoxx Europe 600 index looks lackluster for July

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European stocks advanced Monday, with much of the heavy lifting coming from mining stocks, with trade in July set to wrap up with a preliminary look at July inflation data for the eurozone.

The Stoxx Europe 600 was up 0.3% to 379.47, with only the consumer services and consumer goods sectors in the red. The index on Friday was slashed down by 1% to a three-month low.

Monday marks the last trading session for July, and the pan-European benchmark was looking at a modest 0.1% rise for the month.

The Stoxx Europe 600 Basic Resources Index leapt 1.5% Monday, as mining stocks put in a strong performance. Data released early Monday showed China's construction activity rose to its highest level since December 2013 on government-backed infrastructure spending. China is a key buyer of industrial as well as precious metals.

Shares of iron ore producers Rio Tinto PLC (RIO) (RIO) (RIO) and BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) popped up by 2.2% and 1.9%, and respectively, and copper miner Antofagasta PLC (ANTO.LN) gained 2.1%.

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But China's gauge of manufacturing activity declined to 51.4 in July (http://www.marketwatch.com/story/sluggish-china-factory-data-may-signal-slowdown-2017-07-31), with the report seen by some economists as the first and expected sign the world's second-largest economy is slowing after the government's efforts to rein in a hot property market and rising corporate debt.

Flash inflation: Investors are waiting for Eurostat's preliminary reading on July inflation, due at 10 a.m. London time, or 5 a.m. Eastern Time. Analysts polled by FactSet expect the reading to hold steady at 1.3% on a year-over-year basis. Core inflation is also expected to hold at 1.3%.

"We view the risks surrounding both forecasts as skewed to the upside. The July 2016 monthly CPI prints, which will be dropping out of the yearly calculation now, were -0.6% [month-on-month] and -0.7% month on month, respectively," wrote IronFX senior analyst Charalambos Pissouros.

"Therefore, even in case we get soft monthly prints today, as long as they are better than the dreadful prints of July 2016, they could still drag the yearly rates higher," he said.

The report comes as the European Central Bank is seen as debating when and whether to begin tapering its stimulus measures for the eurozone economy.

"A fresh catalyst is needed for the shared currency ... and look towards the 1.1800 area," said Konstantinos Anthis at ADS Securities. "Today's inflation figures could be the catalyst if the report prints in a favorable manner, but even if this doesn't happen the bias for the euro is pointing higher."

Ahead of the data, the euro traded at $1.1729, down from $1.1751 late Friday in New York.

National indexes: Germany's DAX 30 was up 0.1% at 12,178.74, and France's CAC 40 index picked up 0.1% at 5,135.69.

The U.K.'s FTSE 100 moved up 0.5% to 7,408, aided by the rise in mining shares and benchmark heavyweight HSBC PLC (HSBA.LN) (HSBA.LN). Its shares, also on the Stoxx 600, climbed 2.7% after the Asia-focused lender said it will launch another $2 billion in share buybacks (http://www.marketwatch.com/story/hsbc-to-launch-2-billion-buyback-as-profit-up-57-2017-07-31) after second-quarter profit leapt 57% to $3.87 billion.

Spain's IBEX 35 was up 0.3% to 10,563.90.

(END) Dow Jones Newswires

July 31, 2017 04:54 ET (08:54 GMT)