(Reuters) -European stocks turned positive in afternoon trading on Tuesday after data showed U.S. inflation growth slowed sharply last month, allaying fears of a sooner-than-expected tapering in monetary stimulus by the Federal Reserve.

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 13, 2021. REUTERS/Staff

The region-wide STOXX 600 index rose 0.2%, reversing declines earlier in the session triggered by weakness in luxury stocks.

Underlying U.S. consumer prices increased at their slowest pace in six months in August, suggesting that inflation had probably peaked, though it could remain high for a while amid persistent supply constraints.

“We didn’t get a really high number on CPI, the fact that they came in just below expectations gives the Fed the chance to punt any taper implementation announcement from September to November,” said Thomas Hayes, managing member at Great Hill Capital Llc in New York.

Economy-sensitive cyclical sectors led gains in Europe, with auto parts and oil & gas rising about 1% each.

Many strategists expect European equities to outperform this year due to relatively high rate of vaccinations and catch-up trade in cheaper segments of the market such as banks and energy.

Luxury stocks, including LVMH, Kering, Richemont and Burberry, fell between 2% and 3.7%, tracking moves in Asia on concerns about the spread of COVID-19 cases in China.

France’s CAC 40, home to many luxury names, was the only index to trade lower among the major regional peers.

China is seen as key for the luxury sector, with analysts estimating a third of the sector’s worldwide sales coming from the country.

“Ongoing China coronavirus concerns and lockdowns in several cities in Fujian are not helping sentiment,” said Mark Taylor, sales trader at Mirabaud Securities.

Pandora, the world’s largest jewellery maker, rose 6.7% after it boosted its earnings target for the coming years and lifted its share buyback plan.

JD Sports Fashion jumped 9.4% after it reported a record first-half profit as lockdowns eased and people visited its shops in Britain.

Dutch specialty chemicals maker DSM hit a record high after it said it was weighing the sale of its materials division.

Danish brewer Carlsberg fell 3.0% after a double downgrade to “sell” by Berenberg.

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