BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks closed on a firm note on Wednesday, reacting to some encouraging earnings updates and economic data from the region, and on expectations of more monetary easing by a few central banks. Easing geopolitical tensions contributed as well to the positive mood in the markets.
Soft inflation data from both France and the UK helped.
Investors also reacted to reports of a leadership change at the European Central Bank. A Financial Times report said Christine Lagarde plans to leave the European Central Bank before her eight-year term as president expires in October 2027.
Defense stocks gained, supported by an agreement between India and France to strengthen defense and aerospace ties. Shares from mining and banking sectors were the other prominent gainers today.
The pan European Stoxx 600 closed up by 1.19%. The U.K.'s FTSE 100 climbed 1.23%, Germany's DAX gained 1.12% and France's CAC 40 ended 0.81% up, while Switzerland's SMI settled with a gain of 0.39%.
Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Netherlands, Norway, Poland, Portugal, Russia, Spain and Sweden closed with sharp to moderate gains.
Ireland and Türkiye moved up marginally, while Iceland ended flat.
In the UK market, miners turned in a pretty strong performance. Antofagasta soared nearly 11%. Fresnillo, Anglo American Plc, Glencore and Endeavour Mining gained 4.25%-4.8%, and Rio Tinto climbed nearly 4%.
BAE Systems rose 4% after reporting a better-than-expected 12% rise in full-year operating profit and raising shareholder payouts.
Bank stocks Natwest Group, Barclays, Standard Chartered, HSBC Holdings gained 2%-2.6%.
St. James's Place, Compass Group, Airtel Africa, LSEG, Shell, Scottish Mortgage, Polar Capital Technology Trust, Diploma and Entain also posted handsome gains.
BT Group, National Grid, Diageo, Severn Trent, SSE, Unilever, Legal & General and RightMove declined sharply.
In the German market, Rheinmetall climbed more than 5%. Heidelberg Materials gained about 4.3%, while Siemens, Infineon and Siemens Energy moved up 3.5%-4%.
Commerzbank, Deutsche Bank, SAP, RWE, Siemens Healthineers, Daimler Truck Holding, Porsche Automobil Holding, Merck and BMW also posted strong gains.
Bayer shed more than 7%, weighed down by the company's announcement of a proposed $10.5 billion settlement to resolve ongoing litigation over its Roundup weedkiller.
Brenntag lost about 4.8%, while Fresenius Medical Care, Zalando, Vonovia, Deutsche Telekom and BASF lost 1.7%-2.5%.
In the French market, Thales, ArcelorMittal, STMicroelectronics, Societe Generale,Schneider Electric, BNP Paribas, Dassault Systemes, Airbus, Eurofins Scientific, Safran and Stellantis gained 2%-5%.
Renault, Kering, Capgemini, TotalEnergies, LVMH, Publicis Groupe and L'Oreal also posted notable gains.
Shares of food retailer Carrefour slid more than 5% after the company reported a decline in operating profit in 2025 due to acquisition costs.
EssilorLuxottica and Pernod Ricard closed lower by about 3.5%. Air Liquide, Edenred, Orange and Saint-Gobain also ended weak.
Schneider Electric, BNP Paribas, Airbus, Safran, TotalEnergies, LVMH and L'Oreal gained 1%-3%.
Final data from the statistical office INSEE revealed France's inflation eased to the lowest in five years in January and remained well below the European Central Bank's target of 2%.
The consumer price index rose only 0.3% on a yearly basis in January, following the 0.8% increase seen in December, the data showed. This was the weakest rate since December 2020, when prices remained flat.
Similarly, EU harmonized inflation softened to 0.4%, as estimated, from 0.7% in December. The harmonized rate was also the weakest since December 2020.
At the same time, core inflation hit 0.7% in January, down from 1.1% in the previous month. This was the weakest since July 2021.
On a monthly basis, consumer prices dropped 0.3% after a 0.1% rise. Likewise, the harmonized index of consumer prices slid 0.4% following last month's 0.1% gain. Both the CPI and HICP rates matched the flash estimates published earlier.
UK consumer price inflation eased to a ten-month low in January, the Office for National Statistics reported Wednesday.
Data from the Office for National Statistics showed UK's consumer price index posted an annual increase of 3% in January, in line with expectations. This was the lowest inflation since March 2025, when it stood at 2.6%. This followed December's 3.4% increase.
On a monthly basis, consumer prices fell 0.5% in January 2026, as expected, reversing a 0.4% rise in December.
Core inflation that excludes prices of energy, food, alcohol and tobacco softened to 3.1% in January from 3.2% in December.
Another report from the ONS showed that output price inflation eased to 2.5% in January from 3.1% in December. Meanwhile, input prices dropped 0.2%, following a revised rise of 0.5% in the prior month.
Month-on-month, output prices remained flat and input prices gained 0.4% in January, data showed.
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