European Shares Rally on Hopes of U.S. Rate Cut

European shares rose on Thursday as low U.S. inflation boosted expectations of a Federal Reserve rate cut in September. Gains were led by a strong performance from insurer Admiral. The STOXX 600 index climbed 0.2%, aided by positive economic data from Britain and notable performances from individual stocks like Adyen and Orsted.

European shares opened higher on Thursday, buoyed by benign inflation data that strengthened expectations of a U.S. rate cut in September. A significant rise in insurer Admiral’s shares also contributed to the upbeat market sentiment.

The pan-European STOXX 600 rose by 0.2% by 0710 GMT, nearing a two-week high and marking its third consecutive session of gains. The insurance sector was the biggest winner, with Admiral’s shares jumping 10.3% following a strong first-half performance.

Mild U.S. inflation readings this week have solidified hopes that the Federal Reserve will lower borrowing costs in September for the first time in over four years. Britain’s 0.6% economic growth in the second quarter matched economist expectations, further supporting market gains. The FTSE 100 remained flat, while Dutch payments company Adyen and offshore wind farm developer Orsted saw significant stock movements.