Stocks gain on hopes of US interest rate pause

Worries about tighter monetary policy had weighed earlier after European Central Bank chief Christine Lagarde said more rate increases were likely despite a welcome drop in eurozone inflation in May.

That raised hopes that official nonfarm payroll data due Friday would convince the Fed to pause its rate increases for the world's biggest economy, helping to lift stocks on both sides of the Atlantic. Investors also got relief from the US House of Representatives' approval on Wednesday of a deal between US President Joe Biden and Republican leaders to raise the debt ceiling.

"Inflation in the eurozone has been falling faster than anticipated," said Richard Flax, chief investment officer at Moneyfarm. But "this is unlikely to stop the ECB from pressing ahead with further rate rises."

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