Europe midday: Gains held ahead of US retail sales; Dechra surges

European markets held gains on Friday as investors digested softer-than-expected US producer prices data and eyed retail sales, while animal drug maker Dechra Pharmaceuticals surged on a potential £4bn takeover.

The pan-European Stoxx 600 index was up 0.37% at 1045 GMT, with all major bourses higher. Sentiment was boosted after the US Producer Prices Index for March – seen as a key measure of consumer inflation - fell by 0.5% against expectations for a flat reading, rising by 2.7% year-on-year from 4.9% in February and against forecasts of a 3.4% rise.

“While the consensus remains that there is one more (rate) hike of 0.25% to come in May, there are no more rate rises expected thereafter this year. Indeed, some are projecting that interest rate cuts could follow before the end of the year, depending on the severity of the recession which is expected to follow, although this is not currently the Federal Reserve’s base case,” said Interactive Investor head of markets Richard Hunter.

In equity news, shares in Dechra soared by almost 35% after revealing late on Thursday that the veterinary drug maker had entered talks with Swedish private equity group EQT to discuss a possible all-cash, £4.63bn deal.

Shares in Hermes gained as the Birkin bag maker reported a 23% rise in first quarter sales.

888 surged after the William Hill owner said it expects "significantly" higher adjusted core profit for this year, but that revenue could be lower by a low-to-mid single digit percentage.

Iconic boot maker Dr Martens also soared, up 9%, despite lowering profit guidance for the second time in four months due to higher costs at its Los Angeles distribution centre and lower wholesale revenues.

AAK rose 8% as the Swedish vegetable oil producer reported record-high operating profit for the first quarter of 2023.

Reporting by Frank Prenesti for Sharecast.com