European shares ended well off their highs on Tuesday, 10 November 2026, after a hotter-than-expected US inflation reading boosted expectations of a December interest rate rise from the Federal Reserve. The benchmark STOXX 600 index closed 0.3% higher at 658.32, having traded as high as 662.54 in the morning, within 1% of its record high.

Germany's DAX rose 0.3% to 26,347.45 and France's CAC 40 ticked up 0.6% to 8,278.59. Spain's lender-heavy benchmark outperformed regional bourses, adding 0.98%, while banks led the sectoral gains, up 1.7%. The STOXX 600 still closed within 0.8% of its record high of 660.51, last reached in early August.

Hot CPI changes the rate outlook

Stocks surged in the first half of the session on hopes the Middle East conflict is nearing an end, after Donald Trump said the war with Iran was effectively over. But they began to pare gains after data from the US Bureau of Labor Statistics showed the consumer price index rose 0.4% on a monthly basis in October, above the 0.3% pencilled in by economists. Food prices were up 0.5%, energy prices rose 0.7% on the month, and core inflation rose 0.3%.

Kathleen Brooks, research director at XTB, said the hot reading had increased the chance of a rate rise from the Federal Reserve in December, with an 86% chance of a 25 basis point rise and a 13% chance of a 50 basis point rise. The data followed comments from Federal Reserve policymaker Chris Waller, who said earlier in the day that he supports a 25 basis point rise next month and may even vote for a 50 basis point rise if the inflation print suggested price pressures were becoming sticky.

Chips lead as oil stocks fall

In equity markets, chip-related stocks made gains. Germany's Infineon was boosted as it posted a surge in fourth-quarter earnings and forecast further growth, with revenues up 19% in the three months to September and its segment result, its core measure of adjusted operating profit, up 56%. Annual revenues came in at 16.4 billion euros, up 12%, while operating profit rose to 2.2 billion euros from 1.5 billion euros. Henkel also rose after the German consumer goods maker lifted its full-year sales outlook, now expecting organic sales growth of 3% to 4%.

Vodafone shares dipped even though the telecoms group raised full-year guidance, and BP, Shell and Repsol fell as oil prices eased, with Brent crude down 0.5% at $92.09 a barrel and West Texas Intermediate off 0.1% at $86.74. European shares have now recovered much of last week's technology-led sell-off, but traders cautioned that the move still looked more like a relief rally after panic selling than a full trend reversal, with the US inflation reading now setting the tone for yields and the dollar.

Sharecast: Europe close: Stocks end off highs as US inflation print boosts rate hike expectations

Morningstar: STOXX Europe 600 Index ends 0.27% higher at 658.32