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European Stocks Shrug Off Weak Start, Close On Firm Note

European stocks shrugged off a weak start and moved higher as the session progressed on Wednesday to eventually close with fairly solid gains.

Data showing an unexpected acceleration in the pace of growth in U.S. services sector activity in the month of July, and some upbeat earnings updates from European companies aided sentiment.

Investors continued to follow the developments on the geopolitical front where U.S. House Speaker Nancy Pelosi's visit to Taiwan has raised concerns about fresh tensions between the two superpowers, the U.S. and China. According to reports, 27 Chinese warplanes flew into Taiway air defence zone on Wednesday.

The pan European Stoxx 600 climbed 0.51%. The U.K.'s FTSE 100 gained 0.49%, Germany's DAX advanced 1.03% and France's CAC 40 surged 0.97%, while Switzerland's SMI gained 0.55%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Finland, Iceland, Ireland, Netherlands, Spain, Sweden and Turkey closed higher.

Denmark, Poland, Portugal and Russia ended weak, while Greece and Norway settled flat.

In the UK market, Avast skyrocketed nearly 44% as the competition regulator provisionally cleared the anticipated acquisition of the company by NortonLifeLock following an in-depth merger investigation.

Taylor Wimpey surged 5.5% after raising its profit guidance to the top end of expectations.

Ocado Group gained nearly 5%, while Aveva Group, RightMove, Scottish Mortgage, Smurfit Kappa Group, Smith & Nephew, Entain and Auto Trader Group gained 3 to 4.5%.

Rolls Royce Holdings shares gained about 4% after the company announced that the Spanish government has approved the sale of ITP Aero to a consortium of investors led by Bain Capital Private Equity.

Persimmon, JD Sports Fashion, Standard Chartered, Hargreaves Lansdown, ABRDN and Barratt Developments were among the other major gainers.

Fresnillo and Centrica shed 5% and 4.1%, respectively. Croda International Group, Airtel Africa, Vodafone Group, Sainsbury (J) and National Grid also ended notably lower.

In the German market, Zalando, Continental, HelloFresh, Puma, HeidelbergCement, SAP, Adidas, Porsche Automobil and Volkswagan gained 2 to 6%.

Infineon Technologies gained 5% after rising its guidance for the fiscal year. Deutsche Bank, Deutsche Post, Allianz, Daimler, Munich RE and Henkel also moved up sharply.

BMW dropped more than 5.5% after it warned of a highly volatile second half. Symrise drifted down by about 4%, while E.ON ended 1.6% down.

In Paris, AXA gained about 6% after it posted higher first-half profit and announced a share buyback program.

Air France-KLM, Faurecia, Atos, Michelin, Unibail Rodamco and Societe Generale gained 3 to 6%. Societe Generale reported better-than-expected earnings in the second quarter despite taking a 3.3 billion euro ($3.36 billion) hit from exiting its Russian operations.

Valeo, STMicroElectronics, CapGemini, Credit Agricole and Essilor also finished with impressive gains.

Veolia ended 2.76% down after it has signed a merger agreement concerning the merger of Vigie SA (formerly known as Suez SA) into Veolia.

Orange, Engie and Thales also closed notably lower.

In European economic releases, Germany's exports growth accelerated more than expected in June, while imports increased at a weaker pace, official data showed.

Exports climbed 4.5% in June from the previous month, Destatis reported. The increase in shipments exceeded economists' forecast of 1% and also May's revised 1.3% growth. Meanwhile, imports growth eased more-than-expected to 0.2% from revised 3.2% in May. Economists had forecast imports to rise 1.3%.

As a result, the trade surplus rose to EUR 6.4 billion from revised EUR 0.8 billion in May. The surplus was expected to fall to EUR 0.2 billion.

Figures from Eurostat revealed retail sales volume in eurozone decreased 1.2% on a monthly basis, confounding expectations for an increase of 0.1% and May's 0.4% gain.

Year-on-year, retail sales logged a decrease of 3.7%, reversing a 0.4% rise in May. Economists had forecast an annual fall of 1.7%. Retail sales in the EU27 fell 1.3% on month and declined 2.8% from the same period last year.

The euro area private sector contracted in July as a deepening downturn in manufacturing was accompanied by another slowdown in the service sector, final survey results from S&P Global showed.

The final composite output index slid to 49.9 in July from 52.0 in June. The score was moderately above the flash 49.4. The score fell below the neutral 50.0 for the first time since February 2021, suggesting contraction in the private sector.

Switzerland's consumer price inflation held steady in July to remain at its highest level in twenty-nine years, data from the Federal Statistical Office showed. Consumer prices rose 3.4% year-on-year in July, the same rate of increase as in June.

On a monthly basis, consumer prices showed no variations in July versus an expected fall of 0.1%.

The UK service sector expanded at the slowest pace since the national lockdown in February 2021 in the face of heightened economic uncertainty, final data from S&P Global showed. The final services Purchasing Managers' Index fell to 52.6 in July from 54.3 in the previous month. The flash score was 53.3.

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