July 12 (Reuters) - European shares advanced on Friday and were set for a second consecutive week of gains on upbeat earnings updates, while U.S. inflation data raised hopes of more rate cuts by the Federal Reserve.

The pan-European STOXX 600 was up 0.3% by 0713 GMT, logging its highest level since June 13, led by gains in the telecom sector.

France's CAC 40 and the UK's FTSE 100 were the outperformers, rising 0.5% each.

Consumer prices in France rose 2.5% year-on-year in June, confirming its preliminary reading, while German wholesale prices fell by 0.6% in June, compared with the same month last year.

Meanwhile, U.S. consumer prices unexpectedly fell and the annual increase was the smallest in a year, reinforcing views that the disinflation trend was back on track and drawing the Fed another step closer to cutting interest rates.

Shares of Ericsson rose 8% after the Swedish telecom gear maker reported a smaller-than-expected 7% drop in second-quarter sales.

EMS Chemie slipped 6% as the Swiss nylon manufacturer cut its 2024 sales guidance, citing currency effects as the Swiss franc strengthened.

The earnings season in the United States will kick off with the big banks, including JPMorgan Chase, Wells Fargo and Citigroup, reporting before the bell.

(Reporting by Shubham Batra in Bengaluru;Editing by Sohini Goswami)