European stocks edge higher, helped by sharp drop in U.K. inflation data

investing.com:

Investing.com — European stock markets stabilized Wednesday, with investors digesting better than expected U.K. inflation numbers, more corporate earnings as well as China’s deteriorating economic outlook.

At 03:45 ET (07:45 GMT), the DAX index in Germany traded 0.2% higher, the CAC 40 in France climbed 0.3%, while the FTSE 100 in the U.K. traded largely flat.

The latest economic release in Europe saw the U.K.’s annual headline inflation drop to 6.8% in July from 7.9% the prior month, with falling gas and electricity prices the biggest driver behind the drop in inflation, while food price inflation also eased.

While this is undoubtedly welcome news as far as the Bank of England is concerned, this still leaves inflation more than three times higher than its 2% medium-term target.

Additionally, data released Tuesday showed that basic wages in Britain rose 7.8% in June, a new record growth rate, adding to long-term inflation pressures even after 14 back-to-back increases in interest rates.

There are also important data due in the eurozone, with preliminary second-quarter gross domestic product figures expected to show flimsy growth of 0.2% and industrial production data likely to be negative.

Sentiment had been hit earlier in the day by fresh signs of economic decline in China, the world's second-largest economy, a major regional growth driver and a substantial market for many of Europe’s largest companies.

Data released overnight showed that China's new home prices fell in June for the first time this year, providing more evidence of the pressures facing the country’s important property sector.

This followed Chinese retail sales and industrial production growing much less than expected in July, while data released last