European equity indices rose at mid-session on Thursday, buoyed by the latest U.S. indicators, which raised hopes of a normalization of the U.S. economic situation, while tensions surrounding France's legislative elections eased.

U.S. markets are closed for the July 4th national holiday, and on the eve of the publication of the monthly U.S. employment report.

In Paris, the CAC 40 advanced by 0.76% to 7,690.21 points around 10:50 GMT. Frankfurt's Dax gained 0.29%, compared with a 0.7% rise for London's FTSE on the eve of Thursday's general election.

The pan-European FTSEurofirst 300 index climbed 0.5%, compared with gains of 0.42% for the EuroStoxx 50 and 0.57% for the Stoxx 600.

.

The latest US employment indicators showed that the situation seemed to be normalizing, as the number of jobless claims surprised on the upside, while private-sector job creation calculated by ADP was lower than expected in June.

Meanwhile, the minutes of the Federal Reserve's latest monetary policy meeting showed that central bank officials had noted the "decline" in inflation in June, encouraging markets to bet on rate cuts this year.

The "minutes" also reported signs of a slowdown in growth, suggesting that the exceptional economic situation in the USA was normalizing.

Adding to European investors' relief, the latest political developments in France seem to rule out the risk of the Rassemblement National obtaining an absolute majority in Sunday's second round of legislative elections.

The spread between the 10-year OAT and Bund thus hit a three-week low on Wednesday.

"This easing of the spread over the past few days has given investors a breath of fresh air, allowing the CAC 40 to pull out of its low-lying zone," notes Alexandre Baradez, Head of Market Analysis at IG France.

STOCKS TO WATCH IN EUROPE

French banks rose, as investors felt the risk of the Rassemblement National obtaining an absolute majority had receded. Société Générale gained 2.57%, Crédit Agricole 2.49% and BNP Paribas 2.09%.

Pluxee fell back 10.37% after publishing third-quarter results the previous day that fell slightly short of expectations, despite raising its growth forecasts for the rest of the year.

Eramet advanced 3.46% after announcing a target capacity of 24,000 tons of battery-grade lithium by mid-2025 for its new lithium plant in Argentina.

Biomerieux gains 2.44% after Midcap upgrades its recommendation to "buy" from "hold".

Continental climbed 8.42% as several brokers said they were positive about future margins in the automotive and tire divisions.

Smith & Nephew jumped 7.23% after Cevian Capital announced that it had acquired around 5% of the pharmaceutical equipment group's capital.

RATES

Yields edged up in Europe, as several French debt auctions went off without a hitch on Thursday.

The German ten-year yield gained 2 bp to 2.577%, while the two-year rate climbed 1.7 bp to 2.931%.

The rate on the French 10-year OAT rose by 2.5 bp to 3.271%.

CURRENCIES

The dollar retreats as the latest data suggest a normalization of the US economy and reinforce expectations of lower interest rates.

The dollar declined by 0.19% against a basket of reference currencies, including the euro, which gained 0.12% to $1.0799.

The pound sterling gained 0.13% to $1.2757, as a change of government is expected in the UK, where the Labour Party is widely tipped as the favorite in the general election and could unseat the Conservative government, which has been in power for 14 years.

OIL

Crude oil prices retreated as markets continued to question demand prospects following an unexpected drop in industrial orders in Germany and a rise in new jobless claims in the United States.

Brent crude eroded by 0.52% to $86.89 a barrel, while US light crude (West Texas Intermediate, WTI) declined by 0.57% to $83.4.

NO MORE ECONOMIC INDICATORS ON THE JULY 4 AGENDA (Written by Corentin Chappron, edited by Blandine Hénault)