Soft U.S. inflation boosts European stocks

By Blaise Robinson

PARIS, May 14 (Reuters) - European shares ended higher on Wednesday as tame U.S. inflation data eased worries that the U.S. Federal Reserve might have to raise interest rates to keep inflation at bay, while mining stocks rose on fresh merger talk.

Airbus parent EADS (EAD.PA: Quote, Profile, Research, Stock Buzz) rose 5.9 percent after reporting stronger quarterly profits than expected and stuck to its forecasts for the year despite fresh delays to its A380 superjumbo.

BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) gained 4.9 percent after France's biggest listed bank posted results that beat most expectations.

Also in the financial sector, Dutch financial services group ING Groep (ING.AS: Quote, Profile, Research, Stock Buzz) rose 3.9 percent after reporting first quarter results with production above analysts' forecasts.

The FTSEurofirst 300 index of top European shares ended 0.6 percent higher at 1,354.70 points, its highest close in nearly a week.

Data showed on Wednesday that U.S. consumer prices rose a smaller-than-expected 0.2 percent in April as energy prices held steady. That was less than the 0.3 percent gain analysts polled by Reuters were expecting after a 0.3 percent advance in March. So-called core prices, which exclude volatile food and energy, were up just 0.1 percent, half the increase analysts had forecast.

"The pressure on the Fed seems to diminish, although it might come back at some point. But for now, if they see the chance to cut rates and avoid damage on the economy, they will probably cut," said Arthur van Slooten, strategist at Societe Generale, in Paris.

BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz) rose 4.9 percent, fuelled by speculation that a state-controlled Chinese firm was building a stake in the world's biggest mining company. Much of the speculation centred on giant Chinese aluminium maker Chinalco, already the largest shareholder in Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz).  Continued...