European stocks rose on Thursday, supported by stocks of consumer goods and energy companies, but data showing that inflation in the euro zone is still high reinforced fears of the European Central Bank’s adoption of a further increase in interest rates.
The European index pared back early losses and closed 0.5 percent higher.
Energy stocks rose 1.4 percent, supported by a rise amid signs of a strong economic recovery in China, the largest importer of crude.
A sharp fall in the pound led the British FTSE 100 (LON:) index, which is highly sensitive to the stocks of export companies, to rise 0.4 percent.
Consumer price inflation in the G20 increased to 8.5 percent in February, compared to 8.6 percent in the previous month, on the back of lower energy prices, but the rate was higher than the average of 8.2 percent in a Archyde.com poll of economists.
Although inflation is now below its peak in October of more than 10 percent, there are still concerns that an earlier energy surge has seeped into the economy, making it more difficult to curb rising prices.
European Central Bank President Christine Lagarde said lower prices were not stable and interest rates would have to be raised and kept high for some time.
European markets ended the first two months of the year higher for the first time in four years, supported by the 18 percent rise in bank stocks, as they benefited from higher net interest-related income.
Irish stocks led the gains among their regional peers, rising 2.1 percent, supported by building materials (CRH) rising 7.9 percent after publishing better-than-expected results.