European shares gained for a third day, fueled by optimism from more economic support in China, while investors brace for earnings season and key US inflation data.

The Stoxx 600 Index was 0.5% higher as of 8:08 a.m. in London, with mining and construction stocks outperforming. Daimler Truck Holding AG climbed after it said it will buy back €2 billion ($2.2 billion) of its own shares and raised its expectations for the year. Watch Sensirion Holding AG after the gas and liquid flow sensor maker cut its revenue guidance.

China signaled more economic support measures are imminent after authorities took a small step toward supporting the ailing property market by extending loan relief for developers.

Focus this week will turn to the kick off of earnings season in the US with some of the largest banks unveiling their second quarter results on Friday, while inflation data from the US due on Wednesday will also be closely followed. Three Federal Reserve officials on Monday said policymakers will need to raise interest rates further this year to bring inflation back to the central bank’s goal.

“The market is awaiting the next corporate reports to get any indication of a possible recession. The latest data do not allow for an exact interpretation of further rate hikes,” said Guillermo Hernandez Sampere, head of trading at asset manager MPPM.

After rallying nearly 9% in the first half of the year, markets have had a softer start of the second half on concerns about higher rates and slowing economic growth. In the UK, wage growth held at a level that Bank of England Governor Andrew Bailey said is fueling inflation, maintaining pressure for higher interest rates. Meanwhile, British equities are now the cheapest globally.

SECTORS IN FOCUS:

• European mining stocks may be in focus on Tuesday after iron ore and other metals rose as Beijing stepped up relief measures for property developers, although there was skepticism on whether they were enough to support a sustained rally.
• Shares of retailers could be active after a UK industry group said activity picked up in June as rising prices forced consumers to pay more for food and warmer weather spurred purchases of leisure items from swim wear to barbecues.

For more on equity markets:

• A Deeply Discounted UK Market Is Hard to Ignore: Taking Stock
• M&A Watch Asia: Alibaba, SenseTime, Axiata, China Merchants
• Nucera’s Solid Debut Gives Hope for Moribund Market: ECM Watch
• US Stock Futures Unchanged; Viridian Therapeutics Inc Falls
• Thames Water Gets £750 Million Lifeline: The London Rush

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Author: Macarena Muñoz