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European stocks climbed on Thursday after a modest rise in U.S. consumer prices fuelled hopes that the Federal Reserve was close to the end of its rate hikes, while the luxury sector got a boost from China easing travel restrictions.

The pan-European STOXX 600 added 0.8%, scaling its highest level in a week and rising for the second straight session.

U.S. inflation increased moderately in July as costs for goods including used motor vehicles declined. The consumer price index (CPI) rose 3.2% in the 12 months through July, below expectations of 3.3%, per a Reuters poll of economists.

The data bolstered hopes that inflation in the world’s largest economy was trending lower, potentially allowing the Fed to hit the brakes on its rate hikes next month.

“There’s no incremental information out of the CPI report that should force the Fed to do another hiking. The numbers themselves are decelerating and that should be enough for the Fed to be on hold,” said Marcus Poppe, co-head of European equities at DWS Group.

Rate-sensitive real estate stocks rose 1.6%, while Europe’s personal and household goods index topped sectoral gainers, rising 2.2% after China lifted its pandemic-era restrictions on group tours for more countries, in a potential boon for its tourism sector.

The index, which comprises the region’s largest luxury brands with significant exposure to China, logged its biggest one-day percentage gain in nearly four months.

French luxury group LVMH, currently Europe’s most valuable company, gained 3.4%, pushing Paris’ blue-chip index up 1.5%.

The travel and leisure sector added 1.5%.

“Maybe they are allowed to travel more (but) the other part is you have domestic economic issues. So I am not sure I would be betting on the Chinese consumer to help Western luxury,” said Poppe.

Aiding insurers, Germany’s Allianz climbed 4.9% after reporting better-than-expected quarterly profit.

Germany’s LEG Immobilien rose 3.6% after reporting higher first-half results.

Signs of easing inflation in the United States and euro zone pushed the STOXX 600 to an over one-year high last month, but slowing business activity across the globe and rising Treasury yields have piled pressure on equities in recent weeks.

Siemens dropped 4.8% after the German engineering group missed third-quarter profit estimates.

Denmark’s Novo Nordisk slipped 1.2% after the drugmaker said it will continue to restrict U.S. supplies of starter doses of its hugely popular Wegovy weight-loss drug.

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