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Nov 29 Reuters German shares led gains in Europe on Wednesday after data pointed to easing inflation in the most populous state in the country, boosting expectations that the European Central Bank will cut interest rates next year.

The German DAX rose 1.0 to touch a fourmonth high after data showed consumer prices in the state of North RhineWestphalia fell 0.3 monthonmonth in November and were up 3.0 yearonyear.

The preliminary inflation figure for Germany will be released later in the day, while overall euro zone inflation numbers will be published on Thursday.

European bond yields fell, with the benchmark 10year German bond yield falling to a more than threemonth low of 2.4.

The continentwide STOXX 600 index rose 0.5, with ratesensitive real estate stocks rallying over 2.

Traders priced in interest rate cuts of over 105 basis points bps in 2024 from around 95 bps the day before and also discounted a 90 chance of a first 25 bps rate cut in April 2024.

The ECB is going to come under increasing pressure going forward to cut rates. Growth in the eurozone is flat, if not already in recession and inflation is heading in the right direction, said Stuart Cole, chief macro economist at Equiti.

I am in the camp that thinks the ECB will be forced to blink first and cut rates ahead of its peers. Compared to the US it does not have the underlying…