By Khushi Singh and Shristi Achar A
(Reuters) -European shares climbed on Thursday, led by a rise in automobile and technology stocks, while investors awaited U.S. inflation data for more clarity on the trajectory of interest rate cuts by the Federal Reserve and other major central banks.
The pan-European STOXX 600 was up 0.5% by 0921 GMT.
Market participants keenly await the U.S. inflation report, due at 8:30 a.m. ET (1330 GMT), to assess the timing of rate cuts from the Fed, which will help set the tone for other central banks.
Traders are betting on 140 basis points (bps) of rate cuts by the U.S. central bank this year, with a more than 30% chance of at least a 25 bps cut by the European Central Bank (ECB) as early as March. [0#ECBWATCH]
"There is distinct change in tone in particular from the ECB members, with people talking about weaker growth and weaker inflation," said Michael Browne, chief investment officer at Martin Currie, which is part of Franklin Templeton.
"The market is perhaps looking for two to three rate cuts from the ECB this year."
The automobiles and parts index led sectoral gains, jumping 1.3% and set for its best day in nearly a month.
Precious and base metal miners gained 0.7%, helped by a rise in the price of gold and copper as the dollar softened. Technology stocks added 0.7%, tracking overnight gains in the tech-heavy Nasdaq. [MET/L] [GOL/]
Meanwhile, the ECB's Francois Villeroy de Galhau reaffirmed the previous estimate for French economic growth of 0.9% for 2024 and overruled the odds of a recession in 2024.
France's CAC 40 edged up 0.2%, while Copenhagen's OMX 20 index hit a fresh record high, up 0.5%.
Among individual stocks, Rational AG shares rose 6%, to the top of the STOXX 600 after the industrial kitchen retailer's preliminary 2023 results beat market expectations.
Shares of VAT Group edged 0.9% higher after the Swiss industrial valves maker posted a strong beat in fourth-quarter orders.
The broader industrial goods index, which houses industrial firms, was up 0.8%.
British retailer Marks & Spencer was the biggest loser on the STOXX 600, dropping 4.9% after its uncertain outlook sparked profit-taking.