Europe midday: Gains trimmed as Sweden lifts rates unexpectedly

European stocks trimmed early gains on Thursday as Sweden unexpectedly raised interest rates, raising fears that the European Central Bank may move earlier than planned with its own hike.

The pan-European Stoxx 600 index was up 0.8%, having been 1.25% higher in morning trade as investors digested another earnings and corporate news dump and eyed Russia’s threats to disrupt gas supplies to the continent.

Sweden’s central bank on Thursday raised a key interest rate from zero to 0.25%, citing the highest inflation level since the 1990s.

The Riksbank said there had been “unusually large fluctuations in inflation in Sweden” and the rise last year “was largely due to rapid increases in energy prices.” The Consumer Price Index for March was at 6.1%.

“Since the turn of the year, inflation excluding energy has also risen rapidly and has been significantly higher than the Riksbank’s forecast in February," the central bank said in a statement. "The outcomes indicate that the upturn is now broad and prices of goods and food as well as services are rising unusually quickly.”

On the energy front, markets had been shaken on Wednesday over supply fears after Russia’s Gazprom halted gas supplies to Poland and Bulgaria.

Gazprom turned off the supply tap because they had refused to pay for the gas in roubles, an ultimatum issued by Russian dictator Vladimir Putin in order to raise cash to pay for his unprovoked invasion of Ukraine.

The move pushed European gas prices higher and the euro to a five-year low against the dollar earlier in the day.

In a results-heavy day, shares in banking software specialist Temenos soared 14% on reports that tech-focused private equity firm Thoma Bravo had approached it over a possible takeover.

Asia-focused bank Standard Chartered jumped 16% as it beat quarterly earnings forecasts, while Spain's Banco Sabadell was also higher on positive earnings.

Builders merchant Grafton was up after a jump in first-quarter revenue.

German online takeaway food company Delivery Hero fell 9% despite saying it was on track for a positive adjusted core profit this year.

UK supermarket group Sainsbury fell after warning of lower profits as higher inflation and a cost of living crisis would hit consumer spending.