European Stocks Rise Amid Signs of Moderating U.S. Inflation

European stocks saw gains on Wednesday, fueled by strong travel, leisure, and financial shares, as investors took comfort from signs of moderating inflation in the U.S., hinting at potential rate cuts by the Federal Reserve. The STOXX 600 index closed up 0.5%, with notable performances from Flutter, UBS, and Straumann.

European stocks saw a positive trend on Wednesday, sparked by strong performances in travel, leisure, and financial shares. Investors interpreted fresh signs of moderating inflation in the U.S. as a signal that the Federal Reserve might soon cut interest rates.

The pan-European STOXX 600 climbed 0.5%, with all major regional bourses finishing in the green. U.S. consumer price data for July met expectations and suggested a trend of cooling inflation, fueling hopes for a possible rate cut backed by the Federal Reserve's future decisions.

'The CPI report is a green light for the Fed to cut interest rates at their next decision on September 18,' said Bill Adams, chief economist for Comerica Bank. The travel and leisure sub-index saw a notable one-day gain of 3%, bolstered by a 10.5% jump in Flutter shares after the betting firm raised its outlook.

In earnings news, UBS reported a quarterly profit doubling market forecasts, while German insurer Talanx jumped nearly 7% after strong results. However, gains were tempered by losses in basic resources and utilities sectors, with RWE dropping nearly 6% amidst investor concerns.

(With inputs from agencies.)