European Markets Extended Recent Gains On China Strength & Fed Hopes

(RTTNews) - The European markets ended Wednesday's session in the green, extending its gains from the previous session. Yesterday's gains were fueled by investor hopes that the Federal Reserve will hold off on raising interest rates until December. The Fed has begun its 2-day policy meeting and will announce its decision after the European close on Thursday. Analysts remain split regarding whether the central bank will raise rates.

China's Shanghai Composite index ended the session with a gain of 4.89 percent, marking its biggest single-day gain since August 27. The strong rebound in the Chinese stock market provided some relief in Europe, after the steep declines of the past two sessions.

Energy stocks turned in a strong performance Wednesday, as crude oil prices rallied. A U.S. government report from the Energy Information Administration showed that U.S. crude inventories dropped by 2.1 million barrels last week. Expectations had been for an increase of 1.2 million barrels.

Brewers and spirit companies also surged on the potential for M&A in the sector.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.38 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 1.65 percent.

The DAX of Germany climbed by 0.38 percent and the CAC 40 of France rose by 1.67 percent. The FTSE of the U.K. gained 1.49 percent and the SMI of Switzerland finished higher by 0.92 percent.

In Frankfurt, SAP advanced by 1.84 percent after JPMorgan upgraded it to "Overweight" from "Neutral."

Utilities were under pressure again Wednesday. E.ON sank by 6.16 percent and RWE dropped by 4.65 percent.

Commerzbank fell by 0.84 percent and Deutsche Bank slipped by 0.59 percent.

In Paris, Orange increased by 2.93 percent. Deutsche Bank upgraded its rating on the stock to "Buy" from "Hold."

Technip rose by 3.86 percent and Total added 2.79 percent.

In London, SAB Miller soared by 19.89 percent after Anheuser-Busch InBev said it plans to make a proposal for the brewer. Anheuser-Busch InBev jumped by 6.56 percent in Brussels.

Diageo gained 1.86 percent and Pernod Ricard added 2.57 percent in Paris.

Mondi dropped by 4.67 percent, after Goldman Sachs downgraded it to "Sell" from "Neutral."

Royal Bank of Scotland dipped by 0.36 percent, after it agreed to pay $129.6 million to settle a U.S. regulator's claims that the company sold toxic mortgage-backed securities to now-defunct U.S. credit unions.

Mining stocks turned in a strong performance as precious metal prices increased. Glencore climbed by 5.19 percent and Randgold Resources rose by 3.97 percent. BHP Billiton advanced by 3.60 percent and Fresnillo added 3.15 percent.

Richemont, which reported 5-month sales data, climbed by 6.59 percent in Zurich.

Inditex rose by 5.91 percent in Madrid. The fashion retailer reported a 26 percent increase in profit for the first half of the year, supported by a 17 percent jump in sales amid a weak euro.

Eurozone inflation slowed to 0.1 percent in August from 0.2 percent in July, final data from Eurostat showed Wednesday. The rate for August was revised down from 0.2 percent.

Inflation remains well below the European Central Bank's target of 'below, but close to, 2 percent over the medium term'.

Eurozone's labor costs increased at a slower pace in the three months ended June, figures from Eurostat showed Wednesday. Hourly labor costs climbed 1.6 percent year-over-year in the second quarter, following a 1.9 percent hike in the preceding month, revised down from 2.2 percent. In the fourth quarter last year, the rate of growth was 1.3 percent.

U.K. wages grew at the fastest pace in over six years and the unemployment rate declined in the three months to July, signaling a buildup of inflationary pressures, underpinned by household income.

Pay excluding bonuses increased 2.9 percent from the same period of last year, which was the fastest growth since early 2009, the Office for National Statistics reported Wednesday.

The unemployment rate was unchanged from the quarter ended April, but below 6.2 percent seen in the same period of last year.

UK households' finance outlook rebounded in September to the highest level in six months on lower inflation pressures, results of a survey by Markit Economics and financial information provider Ipsos Mori revealed Wednesday.

The seasonally adjusted Markit Household Finance Index rose slightly to 43.7 in September from August's eight-month low of 43.4.

Reflecting a steep drop in energy prices, the Labor Department released a report on Wednesday showing a modest decrease in U.S. consumer prices in the month of August. The Labor Department said its consumer price index edged down by 0.1 percent in August after inching up by 0.1 percent in July. Economists had expected prices to come in unchanged.

Homebuilder confidence in the U.S. continued to improve in the month of September, according to a report released by the National Association of Home Builders on Wednesday, with the housing market index reaching a nearly ten-year high.

The report said the NAHB/Wells Fargo Housing Market Index crept up to 62 in September from 61 in August, while economists had expected the index to come in unchanged.