Europe close: Stoxx rallies after US data, DAX down on weak survey

(Sharecast News) - European shares closed broadly higher on Tuesday after the US and China extended their tariff truce by another three months and US inflation rose less than expected.

The pan-regional Stoxx 600 index closed 0.21% higher at 548, while Germany's DAX slipped into the red and was down 0.13%, while France's CAC 40 gained 0.71%.

US President Donald Trump, who is waging a global trade war, and China's commerce ministry both announced the truce extension until November as they seek to avert a damaging economic conflict.

The US authoritarian and his Chinese counterpart Xi Jinping are scheduled to meet later this year.

In economic news, headline US CPI rose by 0.2% month-on-month, down from June's 0.3% increase, while on an annual basis, inflation held steady at 2.7%, suggesting that while underlying pressures remained, particularly in shelter and services, the broader inflation picture may be stabilising.

However, core CPI, which strips out volatile food and energy prices, climbed 0.3% in July, accelerating from June's 0.2% increase and lifting the year-on-year rate to 3.1%, up from 2.9%.

Meanwhile, German business sentiment deteriorated more than expected in August amid disappointment over the US-EU trade deal, according to a survey released on Tuesday by the ZEW Center for European Economic Research in Mannheim.

The ZEW economic sentiment indicator fell to 34.7 from 52.7 in July. Meanwhile, the index for the current economic situation declined to -68.6 in August from -59.5 the month before.

''There's more optimism in the air as a tariff truce between the US and China holds, with hopes the global economy will withstand the trade blow a little better. Oil prices have crept higher in expectation of higher demand for energy around the world," said Hargreaves Lansdown analyst Susannah Streeter.

"A longer-lasting trade deal with between China and the US looks to be on the cards, after Trump granted another extension to talks amid a warming up of relations between the two nations. The delay on imposing crippling US tariffs on Chinese goods will be welcome news, especially for American retailers in the run-up to the crucial Christmas season."

"The latest US inflation reading will be closely watched later and is already set to indicate the creeping effect of tariffs, with CPI expected to rise 0.2% in July, while core CPI, which strips out volatile food and fuel prices expected to edge up by around 0.3%."

In equity news, Spirax Group surged 12%, after the company's first-half results beat expectations.

Tecan jumped as the Swiss lab instrument market also posted results.

Vestas Wind Systems gained after winning new US orders, while Sartorius rose 3.6% after broker Jefferies upgraded the pharmaceutical equipment supplier's rating to 'buy" from 'hold'.

Reporting by Frank Prenesti for Sharecast.com