European stocks rose on Tuesday, supported by gains in financial shares and luxury goods companies as investors bet on promising expectations for the Chinese economy. However, comments from European Central Bank President Christine Lagarde limited these gains. The Stoxx 600 index closed up 0.1 percent, ending a six-day losing streak. Chinese Premier Li Keqiang stated that "economic growth in the country during the second quarter will be higher than in the first, and it's expected to reach the annual growth target of around five percent." This news provided some relief to investors who had been anxious in recent days due to lower-than-expected interest rate cuts in China, political instability in Russia following a brief rebellion, and global interest rate hikes that may continue for an extended period.
The financial sector was the biggest winner on the Stoxx 600 index due to gains from companies exposed to China, such as HSBC and Prudential, along with major luxury goods firms like LVMH and Richemont, whose gains ranged between 0.6 percent and 1.2 percent. Lagarde mentioned that "inflation in the eurozone has entered a new phase that may last for some time," indicating a "long battle against price growth that will likely weaken demand and compel companies to rein in prices." Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, stated: "You saw the gains made earlier in the morning fade away, especially after Christine Lagarde spoke, as she reinforced the view that inflation is still too high."
