European stocks recover with focus shifting to central banks

Investing.com – European stocks traded broadly higher on Tuesday as they recovered from a seven-week low brought on by jitters in the tech industry and looked forward to monetary policy announcements later in the week.

Nearing midday trade in Europe, the benchmark Euro Stoxx 50 gained 0.37%, France’s CAC 40 rose 0.36% while Germany’s DAX 30 traded up 0.49%.

On the data calendar, inflation took center stage as Spain’s harmonized consumer price index registered an unchanged reading in May from the month before, narrowly beating expectations for a 0.1% decline.

The U.K. saw prices broadly increase more than expected as a surprise increase of 2.9% year-on-year brought inflation to its highest level since June 2013.

In other economic news, German investor morale unexpectedly deteriorated in June from what had been a two-year high. Despite the worse-than-expected reading, the ZEW Institute that produces the report indicated that prospects for economic growth in Germany for the next six months remained positive.

As annual inflation continues to increase in Britain, the Bank of England (BoE) may find itself between a rock and hard place when it announces its policy decision on Thursday.

Most experts believe that the British monetary authority will stand pat on policy given the continued risks of ongoing Brexit negotiations in a scenario marked by the weakening of Conservative Party control of government in the recent general elections.

Markets will also likely be in a wait-and-see pattern as the U.S. is set to announce its own policy decision on Wednesday. According to Investing.com's Fed Rate Monitor Tool, Fed fund futures put the odds of a rate hike stateside at 90%.

Not to be left out, the Bank of Japan is also expected to stand pat on monetary policy when it announces its decision on Friday.

In company news, Capita PLC (LON:CPI) led the advancers on the pan-European Stoxx 600 with gains of around 12% as the British outsourcing firm broke a string of profit-warnings, giving a positive outlook for the second half of 2017.

Petrofac (LON:PFC) was the second largest advancer, pocketing gains of 5%, as it announced a five-year deal with Kuwait Oil Company valued at $35 million.

Meanwhile, oil prices edged higher in European trading on Tuesday, but gains were limited as the market weighed ongoing efforts by major producers to cut output and reduce a global glut against a relentless increase in U.S. drilling activity.

In Europe, energy stocks traded mixed, as French oil and gas major Total SA (PA:TOTF) lost 0.11% and Norwegian rival Statoil (OL:STL) fell 0.27%, but Italy’s ENI (MI:ENI) gained 0.72%.

Financial stocks registered were mostly higher, as French lenders BNP Paribas (PA:BNPP) and Societe Generale (PA:SOGN) rose 0.17% and 0.64%, respectively, while Germany’s Deutsche Bank (DE:DBKGn) and rival Commerzbank (DE:CBKG) traded up 1.03% and 1.01%, respectively.

Among peripheral lenders, Italy’s Intesa Sanpaolo (MI:ISP) and Unicredit (MI:CRDI) advanced 0.70% and 1.63%, respectively, while Spanish banks BBVA (MC:BBVA) and Banco Santander (MC:SAN) gained 1.12% and 0.51%, respectively.

In London, the commodity-heavy FTSE 100 inched up 0.09%.

Shares in Glencore (LON:GLEN) fell 0.42%, Anglo American (LON:AAL) lost 1.06%, while BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO) traded down 0.08% and 0.94%, respectively.

Energy stocks moved lower, as BP (LON:BP) fell 0.20% and rival Royal Dutch Shell (LON:RDSa) lost 0.26%.

Financial stocks were broadly lower, with shares in HSBC Holdings (LON:HSBA) up 0.03% and Royal Bank of Scotland (LON:RBS) gaining 1.96%, while Lloyds Banking (LON:LLOY) and Barclays (LON:BARC) traded up 0.51% and 1.29%, respectively.

In the U.S., stock futures pointed to a higher open. The Dow Jones Industrial Average futures rose 0.13%, S&P 500 futures gained 0.16%, while the Nasdaq 100 futures advanced 0.16%.