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European Markets Close Higher, Building on Rally; U.S. Inflation Tame

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  • The pan-European Stoxx 600 ended 0.4% higher, with chemicals up almost 1.8% to lead gains while mining stocks dropped 1.6%.
  • Democrats in the U.S. House of Representatives are aiming to pass the $1.9 trillion coronavirus relief bill on Wednesday so that President Joe Biden can sign it by the weekend.
  • Earnings in Europe on Wednesday came from Adidas, Inditex, Geberit, Just Eat, G4S, National Express, The Restaurant Group, Balfour Beatty and Foxtons.

LONDON - European stocks closed higher Wednesday, building on the week's gains, as U.S. inflation data eased some of the market's concerns about rising prices.

The pan-European Stoxx 600 ended 0.4% higher, with chemicals up almost 1.8% to lead gains while mining stocks dropped 1.6%.

U.S. stock futures jumped on Wednesday after data showed inflation stayed tame in February, easing worries about rising prices that have jolted yields higher and unnerved equity investors.

Futures on the Dow Jones Industrial Average gained 350 points to hit an intraday record high. The S&P 500 and Nasdaq were both seen in positive territory on the news.

"Whilst markets are fretting about inflation that might lie ahead, there is no sign of it in the present," said Neil Birrell, chief investment officer at Premier Miton Investors. "The prices of vehicles, clothes and transport were all lower month on month, which suggests that core inflation is not on the move yet; these are key elements of the data."

International markets were also keeping an eye on the passage of the Covid relief bill in the U.S. this week; Democrats in the U.S. House of Representatives are aiming to pass the $1.9 trillion coronavirus relief bill on Wednesday so that President Joe Biden can sign it by the weekend.

The legislation extends a $300 per week jobless benefit boost and programs expanding unemployment aid to millions more Americans through Sept. 6.

Earnings in focus

Earnings on Wednesday came from Adidas, Inditex, Geberit, Just Eat Takeaway.com, G4S, National Express, The Restaurant Group, Balfour Beatty and Foxtons.

Adidas projected a strong rebound in sales in 2021 and slightly outstripped fourth-quarter sales and operating profit expectations, sending shares 2.7% higher.

"Adidas has managed to capture the rush to online retail accelerated by Covid with sales better than expected in all areas except non-China Asia," said Chris Beckett, head of equity research at Quilter Cheviot.

However, Beckett suggested that despite its current strength, the German sportswear brand's recovery is "incomplete" and over the longer term, the market will expect stronger margins.

"We will also be looking for explanations on how the business can close the gap on Nike. It has lagged in its product offering compared to its American counterpart, so it will be interesting to see if they have any product innovation in the pipeline or if they remain content with the current brand," he said.

Just Eat Takeaway.com posted its full-year revenue growth of 54%, with active customers up 23% and the number of restaurants listed on its app by 42%, benefiting from lockdown measures throughout Europe. Shares were up almost 6% on the news.

Adam Vettesse, analyst at investment platform eToro, noted that a 917% rise in courier costs and a 158% jump in marketing expenditure had pushed the company into a loss.

"That said, it is definitely a statement of intent and shows that it is more than willing to throw money and resource to pull ahead of its rivals," he added.

British wealth management firm Quilter jumped more than 9% to lead the Stoxx 600 after a strong full-year earnings report. Broadcaster ITV slid 3.7% after high-profile presenter Piers Morgan resigned following a backlash over his accusations that Megan Markle had lied about her mental health difficulties in an interview with Oprah Winfrey.

- CNBC's Yun Li contributed to this report.

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