(Bloomberg) -- European equities steadied after last week’s slump as investor attention turned to a pivotal US inflation print due on Thursday. Health care and banking stocks were among the key gainers.

The Stoxx Europe 600 was up about 0.1% by the close. Miners like Glencore Plc and Rio Tinto Plc dropped with iron ore after Goldman Sachs Group Inc. warned of the possibility that China may cut steel output this half, just as traders contend with off-peak seasonal demand.

Investors are assessing Federal Reserve Governor Michelle Bowman’s comments after she said the Fed may  need to raise rates further in order to fully restore price stability. The closely watched US consumer price index is projected to mark the smallest back-to-back gains in two and a half years, which would illustrate more of the moderate price growth that the Federal Reserve wants to see sustained.

Meanwhile, German industrial production fell for a second month in June, further holding back Europe’s biggest economy after it barely exited a recession earlier this year.

Geopolitical risks are also back in focus after Ukraine attacked another Russian vessel over the weekend, an escalation in the war that puts at risk significant flows of Russia’s commodities from the Black Sea.

European stocks slumped last week by the most in a month as headwinds from a US credit rating downgrade, a resilient US labor market and higher bond yields weighed on sentiment. Investors will be assessing the final stretch of earnings in the coming days to better understand the outlook for profits in the second half.

European companies have posted more earnings misses than those in the US this quarter due to a weaker economic environment in the euro zone and relatively sluggish demand from China, said Joachim Klement, head of strategy, accounting and sustainability at Liberum Capital.

“Weak industrial production data from Germany indicates that weakness in the euro zone is increasing and thus we think that the outlook given by businesses for the second half of 2023 is likely to remain subdued,” he said.

For more on equity markets:

  • After Earnings, Markets Are Back to Watching Rates: Taking Stock
  • M&A Watch Europe: OHB, Network International, Sika, EQT, Biocorp
  • US Stock Futures Rise

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--With assistance from Michael Msika and Sagarika Jaisinghani.

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