(Bloomberg) -- European stocks rose on Tuesday as euro-zone inflation data for December increased, supporting the case for gradual rate cuts by the European Central Bank, without derailing them.
The Stoxx 600 Index was up 0.3% at the close in London. Retail stocks were among the biggest outperformers, after UK clothing retailer Next Plc boosted its profit forecast. Real estate and construction and material stocks were among the biggest laggards.
Meanwhile, UK domestic-focused equities underperformed amid renewed focus on whether Chancellor of the Exchequer Rachel Reeves will need to raise taxes again in order to meet her fiscal rules. The FTSE 250 index fell 1.3%.
Earlier in the day, the December CPI data for euro zone rose 2.4% from a year ago, matching estimates, with Eurostat saying the increase was driven by higher energy costs. Money markets are currently pricing in four ECB rate cuts of 25 basis-points each for 2025.
“To us, if there is one area where we are sure that interest rates will go down, it’s the euro zone even if the last leg of disinflation is proving hard to achieve,” said Jacques Henry, head of cross-asset research at investment firm Silex in Geneva.
European stock markets have started 2025 in positive territory but their trajectory remains uncertain as trade tensions continue to simmer. The Stoxx 600 jumped on Monday when the Washington Post reported that the US President-elect’s team was exploring softer-than-expected tariffs, which Donald Trump was swift to deny in a post on Truth Social.
Among individual movers, the shares of food services firm Sodexo SA fell as much as 9.5% after the French group’s market update showed a soft start to the year. Kion Group AG shares surged as the warehouse operator announced it was working with Accenture Plc to optimize supply chains using Nvidia Corp.’s AI and simulation technologies.
READ: Europe Takes a Ride on the Tariff Roller-Coaster: Taking Stock
For more on equity markets:
- Europe Takes a Ride on the Tariff Roller-Coaster: Taking Stock
- M&A Watch Europe: Julius Baer, Helvetia, Fagron, KazMunayGas
- From Shein to Stada, Europe’s IPOs to Follow in 2025: ECM Watch
- US Stock Futures Rise; Inari Medical, Ulta Beauty Gain
- New Year, No Cheer: The London Rush
You want more news on this market? Click here for a curated First Word channel of actionable news from Bloomberg and select sources. It can be customized to your preferences by clicking into Actions on the toolbar or hitting the HELP key for assistance. To subscribe to a daily list of European analyst rating changes, click here.
--With assistance from Allegra Catelli and Joe Easton.
©2025 Bloomberg L.P.