- BoE upgrades growth forecast
- UK jobless rate falls but wages remain weak
- German inflation unrevised
- US retail sales flat
FTSE 100: 0.37%
CAC 40: 0.78%
FTSE MIB: 0.62%
IBEX 35: 0.61%
Stoxx 600: 0.39%
European stocks climbed after the Bank of England (BoE) upgraded its economic growth forecast in its Inflation Report on Wednesday.
The BoE's forecast for the UK economy is that it will grow 3.5% this year, compared to an earlier estimate of 3.4%. In 2015 the Bank expects growth of 3%, up from the previous 2.9% projection.
The Bank, however, warned that wages remain weak. Figures released ahead of the Inflation Report showed that while the UK unemployment rate declined from 6.5% to 6.4% in the three months to July, as expected, average weekly earnings slipped at an annual rate of 0.2% - below forecasts. That was the first fall in five years.
Chris Williamson from Markit said the jobs data "adds to the sense that any first rate rise will be delayed until early next year".
The Bank's estimates assume that interest rates will rise from the record low of 0.5% by 25 basis points in the first quarter of next year and reach 2% by the end of 2016, he said.
"While it seems likely that calls to raise interest rates will start to gather strength in coming months, a majority vote for a rate rise still looks some way off.
"February therefore still looks the most likely month for the Bank to dip its toe into the water as far as tightening policy towards more normal levels is concerned, though November remains a possibility if the wage data picks up in coming months (please also see comments from prior email highlighted below into uncertainty about policy decision)."
German consumer prices rose 0.8% year-on-year in July after a 1% increase in June, Germany's statistics office confirmed on Wednesday.
Alpari UK analyst James Hughes said the German economy has been "struggling on all fronts" with weak figures on gross domestic product, inflation, trade and industrial production.
"This of course could pose a huge threat to the Eurozone and gives the European Central Bank huge problems," he said.
"The overall problem for Mario Draghi is that without a strong Germany, we do not have a strong Eurozone, and the fear is that all the measures thrown at dragging the economy out of the mire could well be about to fail due to the failing of the single currency's largest economy."
Eurozone industrial production fell 0.3% in June on the month, following a 1.1% decline. Economists had pencilled in a 0.4% rise.
In the US, retail sales were unchanged in July, following a 0.2% rise in June, missing the consensus forecast for a 0.2% increase, as sales fell at auto dealers and department stores.
"Although July's US retail sales figures suggest that spending in the third quarter got off to a slow start, this doesn't necessarily means that third-quarter gross domestic product growth will be weak," said Capital Economics.
EON, Swiss Life
EON jumped after the German utility said higher production at its North Sea fields boosted first-half earnings which came in better than forecast.
Swiss Life Holding gained after Switzerland's biggest life insurer said it will buy German real estate asset manager Corpus Sireo and reported an increase in first-half earnings.
Meda AB declined after the Swedish drugmaker posted second-quarter earnings that fell short of analysts' projections.
Gagfah SA advanced after the German property company raised its 2014 earnings estimate for a second time.
The euro fell 0.05% to $1.3362.
Brent crude futures rose 0.27% to $103.30 per barrel, according to the ICE.