- UK inflation falls to BoE target
- US retail sales rise
- Eurozone industrial output expands
FTSE 100: 0.16%
CAC 40: 0.17%
FTSE MIB: 0.17%
IBEX 35: 0.06%
Stoxx 600: 0.13%
European stocks rallied as UK inflation reached the Bank of England's (BoE) target and as US retail sales rose more than forecast.
The UK's consumer price index dropped to 2% in December from 2.1% the prior month, surprising analysts who had expected it to remain unchanged.
The fall was driven by food and drink prices and is likely to ease pressure on the BoE to raise interest rates following the recent recovery in the economy.
French CPI, on the other hand, rebounded last month, rising by 0.3% in national terms after measures were unchanged in November.
A report on US retail sales provided a boost to markets in the afternoon. Sales increased by 0.2% in December after a 0.4% rise in November. Economists had pencilled in a 0.1% advance.
"Overall, this report supports our view that a 4% annualised rise in real consumption will help to generate a decent 3% gain in overall gross domestic product in the fourth quarter of last year," according to Capital Economics. "That would provide a good platform for this year."
Barclays Research pointed out that core retail sales were up an annualized 6.6% quarter-on-quarter, the strongest since Q2 2011. "This should translate into robust growth in real consumption as well, our tracking estimate for that remains at 3.8%," the broker said.
The report is also likely to fuel speculation that the Federal Reserve will announce another round of monetary stimulus tapering at the end of the month.
The US central bank began unwinding monthly bond purchases by $10bn to $75bn in December after a series of upbeat economic reports pointed to recovery in the world's biggest economy.
Eurozone industrial output grows
Eurozone industrial production jumped 3% year-on-year in November, compared to an increase of 0.5% in October and the consensus for a 1.8% uptick.
Elsewhere in the bloc, European Central Bank (ECB) Governing Council member Ewald Nowotny said the Eurozone will grow stronger this year than had been expected.
The ECB predicts gross domestic product (GDP) to grow by 1.1% this year. Nowotny, who is also the head of Austria's central bank, said the outlook for Europe as a whole was now much better than it was a year ago.
Shire gained after the drugmaker said it predicts 2013 earnings per share will meet the upper end of its forecasts.
BSkyB advanced after UBS upgraded the media company to 'buy' this morning, saying competitive concerns have been priced in and growth opportunities are now being overlooked.
Ashmore tumbled after the fund manager's assets under management fell 4.1% to $75.3bn in the three months ended December 31st.
Celesio declined after McKesson said it failed to receive enough backing from shareholders to buy the drug distributor.
The euro rose 0.02% to $1.3674.
Brent crude futures fell $0.471 to $106.250 per barrel, according to data on the ICE.