Europe close: Stocks little changed ahead of raft of central bank decisions

European shares were softer on Monday, having started the session higher thanks to upbeat China data.

Yet in the end investors displayed caution ahead of an interest rate decision from the US Federal Reserve on Wednesday.

Polish fashion retailer LPP rebounded from a critical report from short seller Hindenburg and 'buy' recommendations from Citibank.

The pan-European Stoxx 600 index drifted lower by 0.17% to 503.94, with all regional bourses down alongside.

Economists expected the US central bank to keep rates at 5.25-5.5%, while the Bank of England was seen doing the same on Thursday, holding Bank Rate at 5.25%.

Traders will be looking at the Fed's "dot plots" chart to see what impact recent unexpectedly high-inflation readings have on the projected path of rate cuts.

"The chart of expectations will be closely scrutinised for any more conservative tweaks, which could spark negative sentiment. Wall Street closed down for the second session in a row on Friday, and trading looks set to be subdued as investors wait to gauge the attitudes of central bankers," said Hargreaves Lansdown analyst Susannah Streeter.

In a busy week for monetary policy makers, central bankers from Switzerland, Norway, Australia, Indonesia, Taiwan, Turkey, Brazil and Mexico were all due to meet.

Speculation was also mounting that the Bank of Japan might be set to end eight years of negative interest rates on Tuesday and cease or amend its yield curve control policy.

CHINA UPBEAT, BUT PROPERTY WOES PERSIST

Official data from China showed upbeat economic data for the first two months of the year, beating expectations, but its troubled real estate sector still showed sluggishness.

Retail sales in January and February rose 5.5%, better than expectations of a 5.2% increase. China combines data for the first two months of the year to smooth out the effects of the Lunar New Year break.

Industrial production climbed 7%, beating forecasts of 5%, while fixed asset investment increased 4.2%, compared with estimates of 3.2%.

The real estate sector remained sluggish, with investment in real estate falling 9% in January-February compared to the same period a year earlier.

EZ INFLATION FALLS AGAIN IN FEB

Meanwhile in the eurozone, inflation in February was confirmed at 2.6%, down from 2.8% in January, according to official data released on Monday.

The rate compares with a figure of 8.5% a year earlier. Across the broader European Union, annual inflation was 2.8% in February 2024, down from 3.1% in January and 9.9% in 2023, said statistics agency Eurostat.

LPP BOUNCES BACK FROM HINDENBURG ATTACK

In equity news, LPP shares bounced back from a 36% crash during the previous week after Hindenburg alleged that the divestment of its Russian assets was a "sham". The shares recovered 21% on Monday as CEO Marek Piechocki sought to reassure investors that the company would not return to Russia and hinted at a possible share buyback subject to shareholder approval, while the Citi recommendation also helped.

Shares in Alstom surged 6% on news the company had been awarded a contract to supply the signalling, safety, and control systems for the new pink Metro line in the city of Porto in Portugal.