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London - European shares rose on Tuesday, as another batch of weak eurozone inflation data raised the prospect of new stimulus measures from the European Central Bank (ECB) to boost the region's flagging economy.
Eurozone inflation slowed to 0.3% in September, in line with market forecasts, because of falling prices of unprocessed food and energy, according to a first estimate by the European Union's statistics office.
The persistently low price growth underscores the ECB's difficulties in keeping inflation within its target of close to 2% as the eurozone economy stagnates. That raises the chances that it could introduce full-blown quantitative easing (QE) and buy government bonds, although that would be politically difficult because of stiff opposition in Germany.
Nevertheless, traders said many investors would look for more hints on QE at the ECB's meeting on Thursday, and the pan-European FTSEurofirst 300 index was up by 0.5% at 1 378.29 points in mid-session trading.
"At least the inflation figure was not complete deflation and investors will still be looking out for any hints on QE on Thursday," said Rupert Baker, a European equity sales executive at Mirabaud Securities.
Car stocks underperform
European automobile stocks, however, fell after US car manufacturer Ford slashed its profit forecast for this year.
The STOXX Europe 600 Automobiles & Parts Index was down by 0.9%, with French car company Renault falling 2.7% while Italian rival Fiat retreated by 2%.
Some traders remained cautious, pointing to tensions between China and Hong Kong, where tens of thousands of pro-democracy protesters extended a blockade of Hong Kong streets on Tuesday.
"There is still a lot of hesitation. We're getting some bearish signals such as a rise in volatility and a drop in shares of financial institutions. There's just no direction at this point, but I remain cautious," said Jean-Louis Cussac, head of Paris-based firm Perceval Finance.
Banking giant HSBC, Hong Kong's biggest bank, was down 0.7% in London, after falling 2.3% on Monday, but Standard Chartered, another bank heavily exposed to Hong Kong, was flat after sliding 1.6% on Monday.
