European stocks close higher on U.S. inflation data; Meggitt up 16% on takeover bid
LONDON — European stocks closed higher on Wednesday as data out of the U.S. offered a tentative sign that inflation may have peaked.

The pan-European Stoxx 600 provisionally closed up by 0.4%, with construction and materials adding 1.1% to lead gains with most sectors and major bourses in positive territory.

Trading in Europe started the day in a similar fashion to Asia-Pacific, where shares closed mixed on Wednesday.

However, the U.S. Labor Department's Consumer Price Index data showed inflation increasing by 0.5% in July after a 0.9% rise in June, the largest month-to-month drop for 15 months. The annual figure remained at 5.4%, matching the steepest inflationary climb since August 2008.

Core inflation, which excludes volatile food and energy prices, came in at 0.3% monthly, shy of a 0.4% forecast and well below June's 0.9% rise.

The figures offered some hope that the spike in inflation due to supply chain disruptions had peaked, which could cool speculation that the U.S. Federal Reserve may tighten policy and hike interest rates sooner than expected.

U.S. stocks jumped to new highs at Wall Street's open following the news, having closed at record highs on Tuesday following the U.S. Senate's passing of the $1 trillion infrastructure bill, which earmarks $550 billion in new spending for areas including transportation and the electric grid.