European stocks end August at record high after volatile start to the month

LONDON — European markets closed higher on Friday, the last trading day of August, as investors considered inflation data from around the world.

The pan-European Stoxx 600 notched an intraday record high of 526.66 points during the session, according to LSEG data, before paring gains slightly. The index nonetheless closed above 525 points for the first time, having shaken off the sharp sell-off at the start of August to end the month around 1.3% higher.

U.S. stocks were also higher Friday after several days of choppy trading action on Wall Street this week, with the S&P 500 and Dow Jones Industrial Average both heading for a fourth straight winning month.

The tech-heavy Nasdaq Composite has lagged and traded flat amid what analysts have identified as a sectoral rotation into small caps over the summer.

Global equity markets have been buoyed by increased optimism of a soft landing for the U.S. economy and expectations for the start of interest rate cuts from the Federal Reserve in September, with follow-up cuts from the European Central Bank and others.

A series of key inflation data was published in both Europe and the U.S. this week reinforcing those expectations.

Euro zone inflation fell to a three-year low of 2.2% in August, according to flash figures released by statistics agency Eurostat on Friday. The reading was in line with expectations, and below July's 2.6% print.

Elsewhere, France's preliminary, EU-harmonized consumer price index came in at 2.2% for August on an annual basis, down from the 2.7% print of July, the country's statistics office said Friday. Preliminary data from Italy's statistics agency showed the harmonized CPI came in at 1.3% on an annual basis in August, less than in the previous month.

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