European Stocks Higher; German Producer Prices Soar to Record Levels

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European Stocks Higher;  German Producer Prices Soar to Record Levels

By Peter Nurse

Investing.com - European stock markets edged higher Tuesday, following the global trend upwards, although sentiment remains fragile ahead of the start of the U.S. Federal Reserve’s two-day policy meeting.

By 04:00 ET (08:00 GMT), the DAX in Germany traded 0.1% higher, the CAC 40 in France rose 0.1%, and U.K.’s FTSE 100 climbed 0.4%.

European equities are staging a recovery from last week’s selloff, carrying on from the positive close on Wall Street, where the major U.S. benchmark averages climbed from 9-week lows.

However, gains are tentative ahead of the start of the Fed’s latest meeting , which is widely expected to result in another 75 basis point interest rate hike following last week’s higher than expected consumer inflation figures.

The Fed won’t be alone in raising rates this week, with Sweden’s Riksbank hiking by a full percentage point earlier Tuesday and the Bank of England , the Swiss National Bank , and the Norges Bank in Norway all expected to largely follow suit.

German producer prices rose by 7.9% in August, and were up 45.8% from a year earlier, likely increasing pressure on the European Central Bank to keep raising interest rates.

Both figures were records in the 83-year history of the Federal Republic and were well above analysts' expectations.

In corporate news, Unicredit (BIT: CRDI ) stock rose 1.8% after the CEO of Italy’s second-biggest bank, Andrea Orcel, told the German daily Handelsblatt that the lender was looking at acquisitions in Germany as part of plans to become a fully developed European bank.

Bachem Holding (SIX: BANB ) stock soared 9% after the Swiss biotech supplier signed two new contracts for peptides.

On the flip side, Kingfisher (LON: KGF ) stock fell 5.8% after the home improvement retailer posted a 30% drop in profits as it battled higher prices for raw materials and slowing sales.

Oil prices steadied Tuesday ahead of the start of the Fed's two-day meeting that is expected to result in further monetary tightening to combat inflation, potentially stunting economic growth and the demand for crude.

The American Petroleum Institute , an industry body, releases its latest estimate for U.S. crude stocks later in the session, with last week’s figure showing a hefty 6 million barrel addition.

By 04:00 ET, U.S. crude futures traded 0.5% higher at $85.78 a barrel, while the Brent contract rose 0.7% to $92.65.

Additionally, gold futures rose 0.1% to $1,680.05/oz, while EUR/USD traded 0.1% higher at 1.0034.

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