(Bloomberg) -- European stocks gained on Monday as optimism around a potential June rate cut by the European Central Bank grows at the start of another busy week for corporate earnings.

The Stoxx 600 Index was up 0.5% by the close in Paris, boosted by insurance, energy and auto shares, with most sectors in green territory. Trading was lighter due to a holiday in the UK.

Among single stocks, PostNL NV declined after it reported weak volumes. Demant A/S also fell as it reported a miss in sales. Atos SE turned lower as it faces competing offers that will frame discussions with its stakeholders around its restructuring. 

Interest rates and macro data remain dominant themes for markets. European Central Bank Chief Economist Philip Lane told a Spanish newspaper that recent euro-area data made him more certain inflation is returning to the ECB’s 2% goal.

Lombard Odier Chief Economist Samy Chaar backed this view, saying that inflation has clearly come down a lot in Europe. For the ECB, “things are much easier on this side of the Atlantic, clearly we are running for a cut here,” Chaar said in a Bloomberg TV interview.

Investors seeking to gauge the rates path kept a close eye on euro zone producer prices today, along with a slew of services PMI data. France’s composite purchasing managers’ index was revised higher for April, though manufacturing production fell at faster rate. 

This comes after the scaling back in hiring by US employers last week, which was taken as an indication that the Federal Reserve will be able to start cutting rates as early as September and provided a boost to risk assets.

“Robust earnings, slight recovery in economic activity combined to the prospects of lower rates lift risk appetite in European stocks and should keep the Stoxx 600 well supported,” said Ipek Ozkardeskaya, a senior analyst at Swissquote. 

READ: Buying Europe Isn’t Just a Matter of Valuations: Taking Stock

Meanwhile, the delivery of economic surprises in the US have faded this year, with the latest jobs data hinting that the US economy is normalizing. By contrast, Europe’s economy is recovering, with factory activity in expansion mode, while German companies’ outlook is at the highest in a year.

For more on equity markets:

  • Buying Europe Isn’t Just a Matter of Valuations: Taking Stock
  • M&A Watch Europe: Atos Gets Four Offers; Sabadell, BBVA
  • US Stock Futures Rise

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