(Bloomberg) -- European shares rallied in choppy trading amid lower volumes, helped by optimism over more economic support in China.  

The Stoxx 600 Index gained 0.7% by the close in London, as investors brace for the earnings season and Wednesday’s US inflation report. Real estate and construction stocks outperformed, while personal care and tech shares lagged.

Kingspan Group Plc shares soared the most since 2009 after the building materials company issued an unscheduled trading update that analysts said showed the firm’s momentum despite challenging markets. 

The main regional index volume was 23% lower versus its 20-day average. 

China signaled more economic support measures are imminent after authorities took a small step toward supporting the ailing property market by extending loan relief for developers.

US consumer price data due Wednesday is a focus for traders, while the US earnings season is set to kick off with some of the largest banks unveiling their second-quarter results on Friday. 

Three Federal Reserve officials on Monday said policymakers will need to raise interest rates further this year to bring inflation back to the central bank’s goal. 

“The market is awaiting the next corporate reports to get any indication of a possible recession. The latest data do not allow for an exact interpretation of further rate hikes,” said Guillermo Hernandez Sampere, head of trading at asset manager MPPM.

After rallying nearly 9% in the first half of the year, European markets have had a softer start to the second half on concerns about higher rates and slowing economic growth. 

In the UK, wage growth held at a level that Bank of England Governor Andrew Bailey said is fueling inflation, maintaining pressure for higher interest rates. Meanwhile, British equities are now the cheapest globally.

Among other movers, Daimler Truck Holding AG climbed after it said it will buy back €2 billion ($2.2 billion) of its own shares and raised its expectations for the year.

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--With assistance from Michael Msika and Sagarika Jaisinghani.

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