LONDON — European stocks closed higher on Wednesday as investors weighed the latest UK inflation data and monitored global market developments.
The pan-European Stoxx 600 ended the session 1.2% higher, with major bourses and most sectors in positive territory.
German life sciences company Bayer fell 7.2% on Wednesday after its Monsanto Unit had proposed paying $7.25 billion to settle lawsuits claiming that its weed killer Roundup was causing cancer, it said in a press release on Tuesday.
It said it expects its provisions and litigation liabilities to rise from 7.8 billion euros ($9.24 billion) to 11.8 billion euros, with approximately 5 billion euros in litigation-related payments in 2026. Bayer expects a negative free cash flow for this year.
The UK inflation rate fell to 3% in January, according to the latest figures from the Office for National Statistics. Economists polled by Reuters had forecast the consumer price index to fall to 3%, down from 3.4% in the twelve months to December.
"The UK has experienced higher and more prolonged inflation compared to the US or eurozone area, but today's data shows the tide is changing," David Smith, portfolio manager at Henderson High Income Trust plc, said.
"Inflation is likely to drop to 2% by the end of the year if not earlier, opening the door to further interest rate cuts by the Bank of England," Smith added.
The British Pound was 0.2% lower against the dollar on Wednesday afternoon following the as-expected data, at $1.3547. British government bond yields, known as gilts, also held steady.
Sterling dipped and British government bond yields fell during Tuesday's trading session after data showed the U.K.'s unemployment rate rose to a five-year high, while wage growth slowed.
Earnings on Wednesday come from Glencore, BAE Systems, Orange and Euronext.Â
Asian stocks pushed higher overnight in holiday-thinned trade with markets in mainland China, Hong Kong, Singapore, Taiwan and South Korea among those closed for Lunar New Year holidays.
On Wall Street, stocks moved higher in Wednesday dealmaking, with the S&P 500 advancing 0.8%, as traders watched for the Federal Reserve minutes from the policymakers' January meeting.
The next big catalyst this week, however, will likely be the personal consumption expenditures price index reading that's due on Friday. The PCE, the Fed's preferred inflation gauge, will give further insight into the state of the economy.
— CNBC's Pia Singh contributed to this market report.