Europe Markets

Europe stocks close higher after strong Wall Street session; Pernod Ricard up 2.5%

Key Points
  • The pan-European Stoxx 600 index ended up 1.6%, with almost all sectors and major bourses firmly in positive territory.
  • It comes after Wall Street began the month in the black, with the S&P 500 and tech-heavy Nasdaq index closing at record highs.
  • But economic data in the region disappointed, with euro zone headline inflation turning negative in August and German retail sales unexpectedly falling in July.

European stocks closed higher on Wednesday on the back of a strong session on Wall Street, despite troubling economic indicators in the region.

The pan-European Stoxx 600 index ended up 1.6%, with almost all sectors and major bourses firmly in positive territory.

It comes after Wall Street began the month in the black, with the S&P 500 and tech-heavy Nasdaq index closing at record highs, building on the best August performance for U.S. stocks since the 1980s.

Market players in Europe continue to digest economic data in the region. On Tuesday, a flash reading showed that annual headline inflation in the euro zone is expected to come in at -0.2% in August, down from 0.4% in July.

Core inflation — which strips off volatile items such as energy prices — sank to 0.4% year on year in August from 1.2% in July, the lowest reading since records began in 2001.

The figures pile pressure on the European Central Bank to take further action to contain the impact of the coronavirus pandemic, according to analysts. The euro zone's central bank is due to update its inflation estimates in September.

Meanwhile, German retail sales figures fell unexpectedly in July, by 0.9%, according to calendar-adjusted data from the Federal Statistics Office. That missed expectations for a 0.5% increase.

In corporate news, Unilever said on Wednesday it would spend 1 billion euros ($1.2 billion) to eliminate fossil fuels from its cleaning products by 2030. Shares of the Anglo-Dutch consumer goods giant closed up over 2.5% on the news.

On the earnings front, French spirits maker Pernod Ricard said it would take a 1 billion euro impairment charge for the full financial year due to the shutdown of bars and restaurants by the coronavirus pandemic. The firm reported a 13.7% drop in profit to 2.26 billion euros in the year ended June 30. Still, Pernod Ricard stock was up 2.5% as the decline in profits was not as bad as the company had feared.

Meanwhile, Credit Suisse has drawn the ire of Swiss financial watchdog FINMA over a spying scandal that erupted last year. The regulator said it had opened enforcement proceedings against the bank and that the case could last "several months." Nevertheless, Credit Suisse shares rose around 1%.

- CNBC's Silvia Amaro contributed to this report.