European stocks rose, though new inflation data is unsettling investors

European stock markets rose on Wednesday, with indices moving closer to one-week highs. Investor attention has shifted to key macroeconomic data releases from Europe and the US, as well as positive political signals for the technology sector.

The pan-European STOXX 600 rose as much as 0.7% early in the session, approaching a one-week high, though it later pared gains and traded at nearly unchanged levels. A similar pattern was observed in Europe's leading markets — Germany's DAX and London's FTSE 100 gave up part of their intraday gains as government bond yields rose again.

Market sentiment was particularly affected by new inflation data. Preliminary statistics showed that consumer prices rose more than expected in September across several of the eurozone's largest economies. One of the main drivers behind the price pressure is cited as rising energy costs amid the ongoing conflict in the Middle East.

The acceleration of inflation in Germany, France, Spain and Italy has raised expectations that the European Central Bank may need to resume raising interest rates in order to prevent elevated inflation from becoming entrenched in the economy for longer.

Investor attention has now turned to the eurozone's aggregate inflation figure, due to be released on Friday. According to economists polled by Reuters, annual inflation in the eurozone is expected to rise to 3.6% in September, up from 3.2% in August.

Should inflation accelerate further, markets may increase expectations that the ECB will maintain a stricter monetary policy stance. This, in turn, could affect government bond yields and the valuations of European equities.