European stocks edge towards record highs shaking off growth worries Reuters via

© Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany August 30, 2021. REUTERS/Staff

By Sruthi Shankar

(Reuters) -European stocks edged closer to record highs on Wednesday as fresh signs of weakness in Asian economies were offset by hopes for more stimulus, while investors shook off concerns about rising inflation.

After seven straight months of gains, the pan-European started September with a 0.9% rise, holding just a point below its life high.

Asian shares recovered from earlier losses after data showed factory activity across the region lost momentum in August, spurring hopes of more stimulus from central banks.

Meanwhile, a survey showed euro zone manufacturing growth remained strong in August, but supply chain issues due to the pandemic continued to constrain supplies of raw materials, driving up prices.

Investors were unsettled after data on Tuesday showed euro zone inflation surged to a 10-year-high in August, while an European Central Bank policymaker called on the bank to reduce its emergency bond purchases as soon as the next quarter.

The bloc’s banks continued to benefit from rising government bond yields. [GVD/EUR]

“Elevated inflation in the U.S. and Europe, weak retail sales in Germany and a slowdown in China all suggest that the market should be factoring in a temporary slowdown in economic activity,” Sebastien Galy, senior macro strategist at Nordea Asset Management said.

“What the market is focused on instead is that liquidity should remain very ample from the People’s Bank of China to a slow pace of tapering from the Fed and eventually one from the ECB.”

Data due later in the day is likely to show euro zone unemployment rate dipped to 7.6% in July from 7.7% in the previous month.

Retail and travel & leisure stocks were the top sectoral gainers, all rising more than 1.5%.

French spirits maker Pernod Ricard (PA:) rose 3.3% after it posted a stronger-than-expected rise in full-year operating profit, driven by a strong rebound in demand in China and the United States.

Airline SAS gained 1.4% after reporting a smaller quarterly loss as air travel gradually picked up.

French diagnostics specialist BioMerieux climbed 4.7% to the top of STOXX 600 after it confirmed its full-year earnings target.

Supermarket group Carrefour (PA:) slid 4.2% as luxury goods billionaire Bernard Arnault sold the 5.7% stake he owned in the company.