(Bloomberg) -- European stocks extended gains to a fifth day as another sign of cooling US inflation fueled optimism that the Federal Reserve is nearing the end of its interest rate hiking campaign.  

The Stoxx 600 Index gained 0.6% by the close in London, marking the gauge’s longest winning streak since April. Mining and tech stocks were the best performers of the day, while the construction and materials sub-index fell. 

In corporate news, Swiss watchmaker Swatch Group AG rallied after reporting higher sales and profit in its first-half results, with China’s reopening driving a rebound and propelling results above pre-pandemic levels. Meanwhile, watches of Switzerland Group Plc soared as the UK’s biggest retailer of Rolex watches said demand for luxury timepieces had remained solid despite increased prices.

US producer prices barely rose in June from a year earlier, figures out Thursday showed, a day after news that consumer prices increased at the slowest pace last month since 2021. The data helped boost sentiment as the European benchmark index continues its recovery from last week’s decline, the sharpest since March.

Hopes of a “soft landing” have risen, IG chief market analyst Chris Beauchamp said. “The labor market remains solid but with prices easing investors are allowing themselves to contemplate the possibility that Powell may actually achieve his goal of bringing down inflation without tipping the economy into recession.”

“The recent soft US inflation data will have a positive impact on small-cap stocks and sectors sensitive to interest rates, both of which have been heavily oversold in the past three months,” said Liberum analyst Susana Cruz.

Elsewhere, Britain’s homebuilders tumbled after a survey showed that prospective home buyers were pulling back from the property market at the sharpest pace in eight months. Barratt Developments Plc declined as the company announced a decline in total reservations, driven by a slump in first-time buyer bookings.

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