European shares rise as cool US inflation data curbs some rate hike fears

July 14 (Reuters) - European shares ended higher on Tuesday, as a softer-than-expected U.S. inflation reading tempered some bets on a U.S. Federal Reserve interest rate hike, though escalating U.S.-Iran tensions and elevated crude oil prices kept a lid on gains.

The pan-European STOXX 600 index .STOXX closed 0.2% higher at 642.1 points, recouping losses after falling as much as 0.9% earlier in the day.

Basic materials .SXPP jumped 2.4%, as metal prices rallied against a weaker dollar after data showed U.S. consumer inflation slowed more than expected in June as energy prices retreated.

"Overall, the June data paint a fairly favourable picture of inflation, even if one should not over-interpret a single report. We see this as confirmation of our assessment that inflation has peaked," Commerzbank economists said in a note.