European stocks rise amid expectations of interest rate cuts

European shares saw an uptick on Wednesday, driven by anticipations of interest rate cuts following data indicating a slowdown in inflation in both Britain and Germany. Additionally, a surge in commodity prices contributed to gains in resource stocks.

The STOXX 600 index recorded a 0.3 percent rise by 0818 GMT, with notable gains observed in the energy and communications sectors.

Data revealed a more significant than expected decline in producer prices in Germany for November, coupled with a substantial drop in inflation in Britain last month, surpassing expectations. This decline in inflation levels, resembling those seen in core inflation in September 2021, has strengthened expectations of imminent interest rate cuts.

Specifically, the German DAX index rose by 0.2 percent, while the British Financial Times 100 index witnessed a notable 1.3 percent increase.

Energy stocks experienced a rise of 1.1 percent, and basic resources stocks increased by 0.4 percent, driven by the upward movement in prices across various commodities.

Telefonica shares surged by 6.3 percent as the Spanish government prepared to acquire around 10 percent of the telecommunications giant’s shares.

Conversely, Deutsche Post shares saw a decline of 1.3 percent after its American counterpart, FedEx, lowered revenue expectations for the entire year and reported quarterly profits below market expectations.