European stocks climb following key inflation release; ECB meeting looms

Investing.com - European equity indices gained on Tuesday in cautious trade ahead of the release of the latest inflation data for eurozone, in the run up to the next European Central Bank meeting.

The DAX index in Germany climbed 0.6%, the CAC 40 in France gained 0.3% and the FTSE 100 in the U.K. rose 0.1%. 

Eurozone inflation due

Tuesday’s highlight was the release of the flash eurozone inflation figures for May, which precede the policy-setting meeting of the European Central Bank later in the week.

Consumer prices in the eurozone rose by less than expected in May. The eurozone consumer price index (CPI) rose by 1.9% annually last month, below the ECB’s 2.0% target midpoint, decelerating from 2.2% in April.

The latest data offers the European Central Bank room to cut interest rates once more later in the week.

U.S. tariff uncertainty, heightened further by ambiguity over court rulings on the legality of the tariffs, makes the backdrop challenging as the ECB weighs the impact to business activity against implications for inflation further out.

Trade talks still in spotlight

Investors will also be monitoring any developments in trade talks, after negotiations between the U.S. and China, the two largest economies in the world, soured last week. 

U.S. President Donald Trump and Chinese leader Xi Jinping will likely speak this week, White House press secretary Karoline Leavitt said on Monday, days after Trump accused China of violating an agreement to roll back tariffs and trade restrictions.

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The Trump administration is also urging countries to present their most favorable trade proposals by Wednesday, according to a report from Reuters, citing a draft letter to negotiating partners. 

This move is part of an effort to speed up discussions with multiple partners before a self-set deadline in five weeks.

British American Tobacco supported by U.S. growth

In the corporate sector, British American Tobacco (NYSE:BTI) said that first-half revenue is expected to come in slightly ahead of previous guidance, supported by growth in its U.S. business and gains in modern oral products, particularly Velo.

Swiss wealth management Julius Baer (SIX:BAER) has unveiled a new three-year strategy and financial targets through 2028, following a review of its operations under new leadership.

Airbus (EPA:AIR), the world’s largest aircraft, delivered around 51 airplanes in May, industry sources said, down 4% from the same month last year. The tally brings deliveries so far this year to around 243 aircraft, down 5% from the first five months of 2024.

Crude gains on supply disruptions

Oil prices rose Tuesday, extending the prior session’s sharp gains as uncertainty over a U.S.-Iran nuclear deal and worsening tensions between Ukraine and Russia heralded more potential supply disruptions.

At 11:48 ET, Brent futures climbed 1.9% to $65.83 a barrel, and U.S. West Texas Intermediate crude futures rose 2% to $63.77 a barrel.

Iran is expected to reject a U.S. proposal to end a decades-old nuclear dispute, meaning continued sanctions, which would limit Iranian supply and be supportive of oil prices.

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Both contracts gained nearly 3% in the previous session after the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, agreed to keep output increases in July at 411,000 barrels per day, which was less than some in the market had feared and the same hike as the previous two months.

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