European Shares Rise on Softer US Data and Weaker Dollar

European shares rose on Monday as investors welcomed softer-than-expected US economic data and a weaker dollar, which pushed gold prices up by 0.4%. Basic resources stocks led the gain, with Antofagasta, Hochschild Mining, and Fresnillo increasing between 1.9% and 2.3%

The pan-European STOXX 600 index was up 0.1% at 658.51 points, while technology stocks added to gains, rising by 1%. Goldman Sachs has raised its 12-month target for the STOXX 600 to 695 points from 660 previously, implying a 5.5% upside from current levels.

Resilient economic growth and strong corporate earnings are behind this forecast, according to Andrea Cicione, head of research at TS Lombard. He noted that there's a divergence between Europe and the US, with European data remaining relatively strong while US data is softening. This should support European markets now that the earnings season is largely over.

Friday's soft US retail sales data reinforced expectations that the Federal Reserve will keep interest rates on hold next month. Money markets are pricing in an 84% chance of a 25-basis-point European Central Bank rate hike in September, according to LSEG data.