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European stocks close higher; FTSE 100 up almost 2% and pound falls as UK inflation cools

In June, the Bank of England increased interest rates for the 13th time in a row.
Alexander Spatari | Moment | Getty Images

This is CNBC's live blog covering European markets.

European stocks closed higher on Wednesday after U.K. inflation came in cooler than expected.

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The pan-European Stoxx 600 index closed up 0.3%, with oil and gas stocks up 1.1%. The FTSE 100 was up 1.8% as the British pound fell against the U.S. dollar and the euro, and U.K. bond yields fell sharply.

U.K. consumer price index figures showed annual headline inflation of 7.9%, lower than a consensus forecast of 8.2% and down from 8.7% in May.

Core CPI was 6.9%, also below an estimate that it would hold steady at 7.1%. Services inflation was also lower.

In Europe, Dutch chip industry giant ASML nudged 0.5% higher after beating net profit forecasts, before sliding into negative territory in afternoon trading. Stateside, Goldman Sachs reported a bigger-than-expected drop in second-quarter profits, after a bumper crop of big banking profits Tuesday. Netflix, Tesla, IBM and United Airlines will post earnings after the close.

U.S. stocks were higher after the three major averages marked their highest closes since April 2022 Tuesday. Asia-Pacific markets were higher as they reacted to U.S. earnings.

Sterling falls further after lower-than-expected inflation data

Sterling was down 1.2% against the U.S. dollar just before 4 p.m. London time after U.K. inflation came in lower than expected Wednesday morning.

The British currency extended its losses from earlier in the day, having dropped 0.6% against the greenback to $1.295 just before 8 a.m.

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Copper prices decline Wednesday

Copper fell 0.4% Wednesday morning, after declining as much as 0.8%. The metal was last trading at 3.814.

LME Aluminum traded 0.2% lower at 2,199.

Concerns about weakening demand and lack of major stimulus in China, the world's top metals consumer, weighed upon metals prices.

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U.S. stocks open higher

U.S. stocks opened higher Wednesday as the Dow Jones Industrial Average attempts to earn an eighth-straight winning session.

The 30-stock Dow added 115 points or 0.3%. Bot the S&P 500 and tech-heavy Nasdaq Composite gained 0.3%.

— Brian Evans

UK property firms climb following inflation data

Shares of U.K. housebuilders were higher after cooler inflation data led markets to trim bets for peak rates, to 5.75% from 6%. At one point markets were pricing in a peak of up to 6.5%.

Property firm British Land topped the Stoxx 600 index, rising by 8.2%. Property and investment business Derwent London was up by 8.1%, while builders Persimmon and Barratt Developments were up by 7.6% and 5.6%, respectively.

"Sentiment surrounding housebuilders has been hinging on the direction of inflation and interest rates, and concerns that affordability is being sideswiped as mortgages become much more expensive, so any signs that homeowners might show more resilience is being welcomed," said Susannah Streeter, head of money and markets at Hargreaves Lansdowne.

"Consumer discretionary stocks are also among the gainers, with JD Sports on the front foot, in expectation that shoppers might still splash out on a new pair of trainers if mortgage outgoings or rents don't rise quite so high as had been forecast," she added.

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Europe stocks open higher

European stock markets were upbeat in early trade, with the Stoxx 600 up 0.5% after U.K. inflation came in below forecast.

The U.K.'s FTSE 100 shot 1.4% higher as the British pound fell against the U.S. dollar and euro. The CAC 40 rose by 0.6% and Germany's DAX was 0.34% higher.

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Sterling lower after UK inflation print

The British pound was lower against the U.S. dollar and euro at 7:55 a.m. BST following the release of softer than forecast U.K. inflation data.

Sterling was down 0.6% against the greenback at $1.295, its first time below the $1.3 level in six days. It was lower by 0.5% against the euro at 1.155.

Jane Foley, head of FX Strategy at Rabobank London, said market expectations for the peak in the Bank of England's rate-settling had shifted under 6% on the CPI figures, accounting for falls in headline, core and services inflation.

While rates will still move higher due to inflation being well above the euro zone or U.S., a 50 basis point hike in August is now highly unlikely and "the Bank is closer to ended the hiking cycle than it appeared just a few hours ago," Foley said.

"If rate hikes appear to be tipping the economy into recession, the chances of GBP underperformance of both the EUR and the USD are likely to grow," she added.

— Jenni Reid

ASML beats expectations

ASML, the Netherlands-based producer of semiconductor equipment, reported net profit of 1.9 billion euros ($2.131 billion) in the second quarter, higher than the prior year's 1.4 billion euros and above analyst expectations of 1.82 billion euros.

The company also raised its full-year sales growth forecast to 30% from 25%.

"Our customers across different market segments are currently more cautious due to continued macro-economic uncertainties, and therefore expect a later recovery of their market," said CEO Peter Wennink.

"Also, the shape of the recovery slope is still unclear. However, our strong backlog of around €38 billion provides us with a good basis to navigate these short-term uncertainties."

— Jenni Reid

UK inflation 7.9% in June, below expectations

U.K. annual consumer price inflation came in at 7.9% for June, below a consensus estimate of 8.2% and down from 8.7% in May.

Core inflation remained eye-wateringly high, at 6.9%, but was also below an expectation for it to hold steady at 7.1%.

Services annual inflation dipped from 7.4% to 7.2%.

The print will spark reassessments of whether the Bank of England will be tempted away from a second consecutive 50-basis point rate hike on Aug. 3, as it grapples with strong wage growth.

— Jenni Reid

Europe stocks set for mixed open

Europe stocks are set to open mixed Wednesday, according to IG data.

The FTSE 100 is heading for a 3.8 point dip to 7,452 points, Germany's DAX an 11 point decline to 16,124, and France's CAC 40 a 12.2 point gain to 7,335.

— Jenni Reid

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Morgan Stanley beats second-quarter analyst estimates

Morgan Stanley reported an earnings beat before the opening bell on Tuesday thanks to exceptional wealth management revenue.

The firm reported an adjusted $1.24 per share and $13.46 billion in revenue, while analysts polled by Refinitiv forecasted $1.15 and $15.08 billion.

— Brian Evans

Retail sales weaker than expected in June despite inflation drop

Consumer spending was weaker than expected in June despite a seemingly brighter inflation picture, the Commerce Department reported Tuesday.

Advance retail sales showed just a 0.2% increase for the month over May, less than the 0.5% increase that economists surveyed by Dow Jones had been expecting. Excluding autos, the increase also was 0.2%, below the 0.3% estimate.

Falling prices saw gasoline station sales drop 1.4%, offsetting a 2% gain from miscellaneous stores and a 1.9% increase on online purchases.

The numbers are not adjusted for inflation; the consumer price index rose 0.2% for the month, indicating that real sales were about flat.

—Jeff Cox

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