ZEW Economic Sentiment Index For Germany, EU Beats Expectations; Inflation Data In Line With Expectation

Economic data from the 17-nation euro zone and the U.K., released on Tuesday, pointed toward a recovery in the region, albeit at a modest rate, as inflation rose mostly in line with expectations in July, while investor sentiment and industrial production data topped estimates.

In Germany, consumer price inflation, or CPI, in July, remained stable at 0.5 percent compared to June, and steady at 1.9 percent when compared with the same period a year ago. Both figures matched analysts’ expectations. However, the wholesale price inflation, or WPI, declined by 0.3 percent in July, compared to a 0.4 percent decline in the previous month, and against a forecast of a 0.1 percent increase.

Investor sentiment in Germany improved more than expected in July, the Centre for European Economic Research, or ZEW, said on Tuesday. The German ZEW Economic Sentiment index, a survey of approximately 350 economists and analysts regarding their views on the country's economic future over the next six months, improved to 42 points from 38.5 -- its highest level since March -- exceeding expectations of a reading of 40 points.

"First signs of an end to the recession in important euro-zone countries may have contributed to the indicator's rise. This is also reflected by the strong increase of economic expectations for the euro zone. Furthermore, the economic optimism is supported by the robust domestic demand in Germany," ZEW said in a statement.

The assessment of the current economic situation for Germany in August also improved by 7.7 points to 18.3 points.

Meanwhile, the euro area ZEW economic sentiment index, which rates the relative six-month economic outlook for the euro zone, rose significantly to 44 points in July from June’s 32.8, beating analysts’ expectations for a reading of 37.4 points.

Industrial production, or IP, for the euro zone nudged up to 0.3 percent, slightly better than the forecast of 0.2 percent, reinforcing signs of a humble recovery in the bloc's economies. The IP had declined by 1.3 percent in the same period last year.

CPI figures from Spain showed a 1.8 percent rise in prices on an annual basis, as expected.

The UK’s CPI was flat in July, compared to a deflation of 0.2 percent in the previous month, and against a forecast of 0.1 percent gain, while annual CPI grew at 2.8 percent, as expected in July, according to data released on Tuesday by the Office for National Statistics.

Retail Price Inflation in Europe’s third-largest economy remained stagnant in July compared to June. On an annual basis, inflation increased by 3.1 percent in July, marginally down from 3.3 percent, and in line with analysts’ estimates.

On the other hand, the House Price Index, which measures the change in the selling price of a home, rose at 3.1 percent annually in July, compared to a 2.9 percent gain in the previous month, and missed the estimated growth of 3.6 percent.

Following the data release, the Stoxx Europe 600 index was up 0.26 percent, London’s FTSE 100 was up 0.43 percent and Germany’s DAX-30 rose 0.65 percent, while France's CAC-40 was trading up 0.22 percent.