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(Bloomberg) — European stocks were steady as traders assessed inflation data from China which sparked speculation about potential economic stimulus, ahead of US figures that are likely to show prices are cooling.

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The Stoxx Europe 600 was little changed by 9:43 a.m. in London after the benchmark slumped most since March last week. Data showed China’s consumer inflation rate was flat in June while factory-gate prices fell further. Gains in energy as well as food and beverages shares outweighed losses in miners and retail.

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Among individual stocks, Bayer AG shares rose after a report that Chief Executive Officer Bill Anderson was working on a potential spinoff of the company’s agricultural chemicals business via a stock exchange listing. 

European equities have had a weak start to the second half as concerns about higher rates and slowing growth linger, with the chief economist of the Organization for Economic Cooperation and Development saying the European Central Bank faces a tough job deciding when to stop hiking. Traders are now looking to the earnings season to assess how companies have managed through headwinds such as higher interest rates and slowing Chinese demand. Inflation data from the US due on Wednesday will also be significant for markets.

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“Markets will be able to bounce a little this week. So expect some stabilization possibly driven by decent inflation data from the US,” said Joachim Klement, head of strategy, accounting and sustainability at Liberum Capital. “But as the earnings season heats up, we expect companies to provide a rather poor outlook for the second half which should provide continued pressure on share prices in the near term” before eventually recovering.

Meanwhile, Citigroup Inc. strategists including Beata Manthey upgraded European stocks to overweight as they trade at a record discount to the US and should benefit from a weaker dollar as well as any stimulus out of China.

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—With assistance from Michael Msika.