European shares rise as miners, tech stocks jump

European shares rose on Tuesday, boosted by technology stocks and as miners tracked a bounce in metal prices after China cut interest rates, amid growing hopes that the U.S. Federal Reserve would skip raising rates in its policy meeting.

The pan-European STOXX 600 index rose 0.3%. The rate-sensitive tech sector index added 1.6%, while miners jumped 1.8% to a seven-week high.

Industrial metal prices rose after the People’s Bank of China (PBOC) lowered a short-term lending rate for the first time in 10 months to prop up risk sentiment.

China-exposed luxury giant LVMH (EPA:LVMH), also Europe’s most valuable firm, rose 1.5%.

Investors were also hopeful that U.S. inflation data later in the day would likely show an easing in prices in May, further adding to bets that the Fed would skip hiking rates in its policy decision on Wednesday.

“What we are seeing is a reaction to growing expectations that the FOMC will pause with rate hikes this month – even though it is too early to suggest yet that the rate hiking cycle has come to an end,” said Stuart Cole, chief macro economist at Equiti Capital.

Traders see a near-76% chance of the Fed holding rates at the 5.00%-5.25% range on Wednesday, while pricing in a 56% chance of a rate hike in July, according to the CME FedWatch tool.

The European Central Bank will hold its policy meeting on Thursday, where it is expected to hike rates by another 25 basis points to tame stubborn inflation.

The STOXX 600 has traded in a limited 1% range for one week now as markets look for more economic data and updates from major central banks to drive a definitive move.

German consumer prices, harmonised to compare with other European Union countries, rose by 6.3% on the year in May, data showed.

Embracer jumped 5.2% to the top of the STOXX 600, after the Swedish games group announced a restructuring programme to slash costs and investments, including development of new products.

Swedish industrial technology group Hexagon’s shares gained 4.3%, after it announced a collaboration with Nvidia, the world’s most valuable chip firm.

Shares of Admiral, meanwhile, slid 6.1% to the bottom of the STOXX 600 after traders said Citi cut its rating on the British motor and home insurer to “sell.”

European shares rise as miners, tech stocks jump