Europe close: Stocks end mixed amid soft economic data, hawkish ECB

European shares were mostly higher on Monday despite soft economic data and hawkish comments from the European Central Bank's chief economist.

The pan-European Stoxx 600 index was little changed, edging up 0.02% to 464.18 with little corporate news to drive sentiment.

Germany's Dax on the other hand put on 0.48% to 15,653.58 while Spain's Ibex 35 added 0.49% to 9,511.0.

Euro/dollar was up by 0.55% alongside to 1.0684 while Dutch TTF natural gas futures were off by 1.8% at €43.2/MWh.

European Central Bank chief economist Philip Lane said that the monetary authority would likely need to increase borrowing costs further after next week’s planned hike.

"The current information on underlying inflation pressures suggests that it will be appropriate to raise rates further beyond our March meeting, while the exact calibration beyond March should reflect the information contained in the upcoming macroeconomic projections, together with the incoming data on inflation and the operation of the monetary transmission mechanism," he told an audience in Dublin.

Elsewhere, investor sentiment in the eurozone unexpectedly deteriorated in March, according to the Sentix index for the bloc, which fell to -11.1 from -8.0 in February, coming in below consensus expectations of -6.3.

The current situation index rose to -9.3 in March from -10.0 the month before, while the expectations gauge declined to -13.0 from -6.0.

To darken the mood further, eurozone retail sales increased at a slower than expected clip in January, with household budgets continuing to be strained by both high inflation and rising interest rates.

According to Eurostat, retail sales rose 0.3% in January - below the 0.5% increase forecast by economists. On an annual basis, retail sales were down 2.3%.

The rise, which did little to reverse the 1.7% fall seen in December, was driven by food, drinks and tobacco, which combined for a 1.8% month-on-month increase in January.

Earlier in the day, optimism from a Wall Street rally late on Friday was tempered by China's decision at the weekend to set its economic growth target for 2023 at around 5% at its National People's Congress, towards the lower end of expectations. The news hit miners, for whom Beijing is a major customer, with Anglo American, Antofagasta, Rio Tinto and Glencore all lower.

In the background, investors ere eyeing US payroll data due out on Friday after February’s blowout number sparked fears that the Federal Reserve might raise interest rates for longer.

Fed Chief Jerome Powell was also scheduled to hold his two-day testimony before Congress on Tuesday and Wednesday.

In equity news, Credit Suisse shares dipped after Harris Associates, one of the Swiss bank's major shareholders, announced it had sold its stake over the past few months.

B&Q owner Kingfisher and Tesco rallied after an upgrade to ‘buy’ from ‘hold’ at Jefferies, while B&M European Value Retail was higher after an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets.

Shipping services company Clarkson gained after it reported a sharp rise in annual earnings, driven by a strong performance in its broking division. Pre-tax profit for the 2022 calendar year came in at £100.1m, compared with £69.1m a year earlier. The total dividend was lifted to 93p a share from 84p.