European shares edge higher, but mixed data limit gains

European shares edged higher on Thursday as U.S. inflation data fuelled hopes that the Federal Reserve was on the brink of ending its post-pandemic tightening cycle, although a raft of mixed economic data limited further upside.

The pan-European STOXX 600 index edged up 0.1% by 0708 GMT.

In the previous session, the benchmark index logged its biggest percentage gain since early June after a faster-than-expected slowdown in U.S. consumer inflation reinforced bets that the Fed could end its rate hikes after July.

Keeping a lid on risk sentiment was weak trade data from China, while on the other hand, Britain’s economy contracted less than expected in May.

Industrial stocks, which are sensitive to China-related news, were the biggest drags in the index.

Britain’s largest homebuilder Barratt Developments (LON:BDEV) fell 4% after the company flagged it would build far fewer homes this fiscal year, while shares of Swatch rose 6.4% after the watchmaker reported record growth in the first half of the year.