European stocks advanced for a second day, as retailers climbed and data showed U.K. inflation fell to the lowest level in 15 years.

The Stoxx Europe 600 Index added 1.1 percent to 343.74 at 12:02 p.m. in London, extending gains after a report showed Britain’s consumer-price growth slowed to 0.5 percent in December, below estimates, amid a plunge in oil prices. The U.K.’s FTSE 100 Index climbed 0.6 percent. With crude below $45 a barrel, speculation is rising that the European Central Bank will need to step up stimulus measures to avert deflation.

“Certainly central banks remain front and center as far as investors are concerned,” Keith Bowman, an equity analyst at Hargreaves Lansdown Plc in London, said by phone. “A low inflation number reduces the prospects for higher interest rates.”

Retailers rose the most of the 19 industry groups in the Stoxx 600. William Morrison Supermarkets Plc led gains, jumping 4.9 percent after saying it will start a search for a new chief executive officer to replace Dalton Philips, who will step down at the end of the year. It also reported sales at stores open at least a year fell 3.1 percent, excluding fuel, in the six weeks ended Jan. 4. That beat the median estimate of analysts for a 4 percent drop.

Tesco Plc advanced 2.9 percent. J Sainsbury Plc and Ocado Group Plc increased more than 3 percent.

Metro AG gained 3.9 percent. The operator of Germany’s Kaufhof department stores reported an increase in first-quarter adjusted revenue as all divisions had better same-store sales in December.

Greek Stocks

Greek stocks rose for a third day, posting the largest gain of 18 western-European markets. The ASE Index advanced 2 percent as the country prepares for a general election on Jan. 25. The broader European index is still 2.1 percent below an almost seven-year high reached Dec. 5, amid sliding oil prices and concern that the Greek election could lead to the nation exiting the euro.

“Oil prices are still a key feature in markets and investors are weighing how they’ll impact the economy,” said Bowman. “Having said that, it doesn’t look as though there’ll be any early actions as far as interest actions are concerned and the fall in oil should help other areas of the economy like consumer spending.”

Sika AG climbed 4.3 percent after the Swiss adhesives maker reported higher full-year sales on growth in emerging markets. Revenue rose 8.3 percent to 5.57 billion Swiss francs ($5.5 billion) in 2014. That compares with the 5.54 billion-franc average of analysts’ estimates.

BG Group Plc and Statoil ASA led a gauge of energy companies higher, reversing an earlier drop even as oil extended losses amid speculation that U.S. crude stockpiles will increase.

Royal Philips NV slid 1.4 percent after the world’s largest lighting manufacturer said production delays at a facility in Cleveland will hurt earnings more than previously forecast.

 

Source: Bloomberg – Europe Stocks Gain as Retailers Rise, U.K. Prices Miss Forecasts

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