Europe stocks nudge higher; Sterling gains after UK wage growth falls to two-year low
European stocks were slightly higher on Tuesday as they sought to regain momentum after last week's volatility.
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European stocks closed higher last Friday as investors digested economic data from the region including a preliminary U.K. second-quarter GDP reading, July inflation prints out of France, Spain and Italy, and euro zone industrial production for June.
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LONDON — European stocks were slightly higher on Tuesday, as market participants monitored a fresh batch of economic data following last week's volatility.
The pan-European Stoxx 600 index traded 0.2% higher at around 2:50 p.m. London time, erasing earlier losses. Utilities rose 0.8% to lead gains, while mining stocks slipped 0.7%.
It comes after European stocks closed mixed on Monday, with upcoming U.S. and U.K. inflation data dominating investor attention.
U.K. wage data released by the Office for National Statistics on Tuesday showed that pay excluding bonuses grew 5.4% year-on-year between April and June — the lowest rate in two years.
The unemployment rate fell to 4.2% from 4.4%, the ONS said, while economists polled by Reuters had expected an increase of 4.5%.
Jack Kennedy, senior economist at jobs site Indeed, said the figures showed the labor market remained "fairly tight" and that wage pressures were softening only gradually, potentially limiting the level of monetary easing the Bank of England is able to deliver this year.
U.K. inflation data, due on Wednesday, will be the first print since the Bank of England cut interest rates by 25 basis points. After two months at 2%, economists polled by Reuters expect the headline rate to tick higher, to 2.3%.
Money markets are currently pricing in a high probability of further rate cuts amounting to 50 basis points this year. The Bank of England's key rate currently sits at 5%.
The British pound was higher following the labor market data, trading up 0.4% against the U.S. dollar at $1.2817.
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Investors around the world will also be analyzing the latest U.S. inflation data this week, in order to get a better picture of the state of health of the world's largest economy.
Data released Tuesday showed the U.S. producer price index, a measure of wholesale prices, rose less than expected in July. The 0.1% rise on the month is likely to be seen to open the door further for the Federal Reserve to start lowering interest rates.
U.S. stocks rose on the news, with investors poised to monitor the more widely followed consumer price index out on Wednesday.
