Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Eurostocks Reverse Losses on U.S. Data

LONDON -- European shares closed around 1 percent higher Wednesday following a dramatic midsession turnaround after benign U.S. inflation data lessened the pressure for higher interest rates.

Technology, up 2.2 percent, banking, up 1.4 percent, and economy-sensitive energy, consumer staples and industrial sectors were the leading sectors in Europe, while drug stocks were the only major losers, off 0.14 percent.

France's CAC-40 index set a new closing record of 4,481.75, finishing up 1.44 percent. German stocks closed up 0.71 percent.

U.S. consumer prices were unchanged in May after a huge 0.7 percent jump in April f the biggest increase in more than eight years. U.S. economists in a Reuters survey had expected rises of 0.2 percent in the overall index.

"European stock market screens turned from red to blue after the data," said Sharon Coombs, European strategist at HSBC Securities. "The markets had discounted a rise in Fed Funds at the end of this month although this may still happen."

The benchmark 30-year U.S. Treasury bond jumped more than a full point after the data. By the European close the Dow Jones index was up 1.4 percent at 10,742.43.

European stock markets have been trapped in narrow ranges in recent weeks as investors have sought to assess the impact on global equities of a U.S. rate tightening. The Federal Reserve next meets to decide on monetary policy on June 29 to 30.

David Thwaites, European strategist at France's BNP, said the markets had been betting on a benign CPI figure.

"It's not going to be enough to remove the worries about interest rates and stop the Fed from doing what the Fed is going to do", he said.

"It's much more important what Greenspan says tomorrow [Thursday], such as the tone of his comments," he added. Federal Reserve chairman Alan Greenspan is due to present his update on the U.S. economy to Congress on Thursday.

Among individual stocks, German airline Lufthansa fell 1.8 percent, paring some of its earlier losses, after it said it would lower 1999 earnings forecasts if trading conditions failed to improve soon, although results in 2000 were expected to be sharply better.

French banks were also a focus as trading in Soci?t? G?n?rale and Paribas resumed following suspension Tuesday after Soci?t? G?n?rale increased its offer for Paribas late Monday. Paribas rose 2.1 percent. SocGen was off 1.5 percent. BNP , which has made a hostile bid for both Soci?t? G?n?rale and Paribas, was off 0.3 percent.

Among buoyant energy shares, oil stock Elf Aquitaine rose 2.5 percent after it said it was back in the hunt for Norway's Saga Petroleum and had lowered its threshold for bid acceptance to 50 percent of Saga shares.

French oil group Elf had appeared to have lost its bid for Saga to Norsk Hydro and Norwegian state owned Statoil.

In London, Coca-Cola Beverages fizzed 26.7 percent higher after news of a planned 4.3 billion pound merger with Athens-listed Hellenic Bottling Co. , up 0.47 percent.