Europe midday: Shares defy rate worries; Dechra tanks on profit warning

European shares opened higher on Monday, despite sell-offs in the US on Friday after US inflation came in higher than forecast, fuelling fears of further interest rate hikes, and a weak session in Asia.

The pan-regional Stoxx 600 was up 1% at 1150 GMT with all major bourses higher. Investors will be eyeing eurozone inflation data and European Central Bank policy minutes, which are both due out on Thursday.

Wall Street was hit last Friday when the personal consumption expenditures price index, the Federal Reserve's preferred gauge of inflation, surged by 0.6% in January a 0.2% rise the previous month.

"On Friday all notion of a possible pause appears to have gone the way of the dodo, in the face of a series of better-than-expected economic data releases, with markets now pricing in another three 25bps rate increases at the March, May, and June Fed meetings," said CMC Markets analyst Michael Hewson.

"There had already been signs that the January core PCE numbers might have been susceptible to an upside surprise after retail sales in January surged by 3%, however, Friday’s sharp jump in the Federal Reserve’s preferred inflation measure to 4.7%, was as unwelcome as was the upward revision to December’s number from 4.4% to 4.6%."

"Throw in the biggest upswing in personal spending in 12 months, by 1.8%, and you have all the ingredients of a US economy that shows few signs that higher prices are weighing on demand."

Continental shares received a boost on Monday as Eurozone economic sentiment was steady in February, according to a survey released by the European Commission.

The headline economic sentiment indicator for the bloc nudged down to 99.7 from 99.8 in January, coming in below consensus expectations for a reading of 101.0.

In the UK eyes were on talks between Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen over the vexed question of the Northern Ireland portion of the Brexit deal which has sent the hard-right win of the Ruling Conservative Party into apoplexy.

Hopes were high in Westminster that some sort of agreement can be struck on the so-called Northern Ireland Protocol, which keeps the province inside the European Union’s single market via a nominal border in the Irish Sea.

In equity news shares in distribution group Bunzl gained after a rise in full-year profits on the back of price rises.

Dechra Pharmaceuticals tanked 14% after reporting weaker first-half profits and issuing a profits warning.

Reporting by Frank Prenesti for Sharecast.com