European stocks shrug off weak Chinese property data

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European shares rose early on Wednesday, rebounding from a five-week low hit in the previous session, as investors shrugged off further evidence of weakness in the Chinese economy.

In Europe, the Stoxx Europe 600 index rose 0.2%, led by consumer cyclical stocks. France’s Cac 40 rose 0.4%, while Germany’s Dax gained 0.2%.

Asian markets were overshadowed by another downbeat data from China, which showed new home prices fell 2.5% month-on-month in July after falling 2.2% the previous month.

Hong Kong’s Hang Seng fell 1.4%, China’s benchmark CSI 300 fell 0.7%, South Korea’s Kospi fell 1.5% and Japan’s Topix fell 1.3%.

China’s once-dominant real estate sector has struggled with weak demand as the economy struggles to bounce back after three years of strict epidemic restrictions, leaving major property developers in debt.

The decline in the property sector came as concerns grew about China’s economic recovery after a flurry of data in the past few weeks suggested the country was slipping into deflation, while consumer and business activity stalled.

A day earlier, the People’s Bank of China unexpectedly cut the interest rate on a one-year medium-term lending facility to boost economic growth, which affected lending to financial institutions.

Meanwhile, sterling edged up 0.3% to $1.2739 after the latest data showed UK inflation fell to an annual rate of 6.8% in July, down sharply from 7.9% in June.

While UK inflation remains higher than elsewhere in Europe, the headline data fell more than economists expected, boosting hopes that the Bank of England may soon ease its aggressive monetary tightening policy.

In the U.S., futures contracts tracking the benchmark S&P 500 and the tech-heavy Nasdaq 100 rose 0.1% ahead of the New York open.

Stocks on Wall Street hit a five-week low in the previous session after stronger-than-expected U.S. retail purchases raised concerns about persistent price pressures, boosting bets the Federal Reserve will keep interest rates higher for longer.

Investors’ attention turned to the minutes of the Federal Reserve’s latest policy meeting due later in the day, hoping for insight into the central bank’s future interest rate decisions.