European equities recovered from one-month lows on Thursday, buoyed by weaker-than-expected U.S. private payrolls data that tempered expectations for aggressive interest-rate hikes at the European Central Bank's upcoming policy meeting.
The STOXX 600 rose 0.5% to 649.10, moving away from Wednesday's session low. Germany's DAX gained 0.7%, the FTSE 100 in London advanced 0.7%, and France's CAC 40 edged up 0.1%.
Germany's 10-year Bund yield fell 1.2%, pulling back from 2011-era highs of 3.37% touched earlier in the week, signaling reduced pressure for further monetary tightening across the euro area.
The U.S. ADP private-payrolls report for August showed only 38,000 jobs added, well below consensus forecasts. The print undercut arguments for an aggressive rate path and reinforced a "wait and see" stance expressed Wednesday by New York Fed President John Williams regarding the pace of monetary-policy adjustments.
In the euro zone, producer-price data for July provided a steeper inflation read than markets had priced in. Year-on-year producer inflation accelerated to 5.8% from 4.6%, while the monthly rise of 1.6% significantly exceeded the 0.3% decline recorded in June and came nearly 35 percentage points above the 1.2% consensus estimate. Energy costs surged 12.9% annually and 5.6% month-on-month. Industrial prices excluding energy rose 3.1% year-on-year, up from 3.0%, and intermediate-goods inflation climbed to 6.3% from 6.1%. Month-on-month, Ireland led the bloc at 4.3%, while Spain and Italy both rose 3.0% and Germany and France each gained 1.1%.
Non-durable consumer goods remained the sole category still disinflating, falling 0.7% annually. Capital-goods inflation increased to 2.6% from 2.3%.
S&P Global's chief economist noted that the resilience in underlying economic data "may feel a tightening of policy at next week's meeting is now justified," pointing to the tension between stronger price pressures and softer labor-market signals.
August's S&P Global Eurozone Composite PMI held steady at 52.0, matching July's eight-month high. The services PMI stood at 51.6, with input and output price pressures rising to three-month highs, adding further weight to the case for ECB action at its September 10 meeting.
Commodity markets moved higher. WTI crude rose 0.90% to $91.83 a barrel and Brent crude gained 0.64% to $96.24. Gold surged 2.8% to $4,537.65 an ounce, with silver advancing 2.6%.
