Eurozone core inflation rises; Stoxx Europe 600 index looks lackluster for July
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European stocks advanced Monday, lifted by a rally in mining stocks and with trade in July wrapping up with a stable reading of headline inflation for the eurozone.
The Stoxx Europe 600 was up 0.3% to 379.50, 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 the month, and the pan-European benchmark was in line for a tiny rise of less than 0.1%.
The Stoxx Europe 600 Basic Resources Index leapt 1.5% on 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% and 1.5%, and respectively, and copper miner Antofagasta PLC (ANTO.LN) gained 1.9%.
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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: Eurostat's preliminary headline inflation reading for July held steady at 1.3% year-over-year, which met expectations in a FactSet survey of economists. Core inflation, which strips out volatile energy and food prices, rose to 1.2% compared with an estimate of 1.1%.
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.
"The improved economic backdrop in the eurozone has fed speculation that the ECB could be poised to change policy direction. For the most part, ECB President [Mario] Draghi has been careful to push the message that the central bank wishes to be 'patient' with respect to any tapering of its bond buying program," wrote Jane Foley, senior FX strategist at Rabobank.
"Although the July estimate of eurozone core CPI inflation at 1.2% y/y was a little firmer than expected, it remains well below the ECB's target," she said.
Separately, the eurozone's unemployment rate was 9.1% in June, compared with a FactSet estimate of 9.2%.
The euro hit an intraday high at $1.1763 after the data were released, but moved back to $1.1730, largely where it was before the figures were released. The shared currency bought $1.1751 late Friday in New York.
Stock movers: Shares of banking heavyweight HSBC PLC (HSBA.LN) (HSBA.LN)(HSBA.LN) gained 2.8% 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.
Sanofi SA (SAN.FR) (SAN.FR) was up 1.3% as the French drugmaker raised its earnings guidance (http://www.marketwatch.com/story/sanofi-profit-falls-10-as-restructuring-costs-hit-2017-07-31) for 2017. Second-quarter net profit, however, did fall by 10% to EUR1.04 billion on higher restructuring costs.
Carrefour SA (CA.FR) fell 1.6% after Deutsche Bank cut its rating on the French supermarket operator to sell from hold, saying the shares were expensive.
National indexes: Germany's DAX 30 was up 0.1% at 12,178.76, and France's CAC 40 index turned down 0.1% to 5,127.51.
The U.K.'s FTSE 100 moved up 0.4% to 7,395 (http://www.marketwatch.com/story/ftse-100-lifted-by-shares-of-miners-hsbc-2017-07-31), and Spain's IBEX 35 was up 0.2% at 10,557.60.
(END) Dow Jones Newswires
July 31, 2017 06:35 ET (10:35 GMT)