Europe midday: Shares down despite bullish Wall St, US data; Ex-divs weigh

European shares were lower as heavyweight stocks trading ex-dividend dragged on the benchmark Stoxx 600 index and investors digested US CPI data from Wednesday.

The pan-regional Stoxx 600 index was down 0.1% to 524.20 with all major bourses lower.

US inflation rose 0.3% in April, below the 0.4% rise forecast although consumer prices were still 3.4% higher than a year ago.

"European markets have failed to follow the bullish theme set in the US, after all three main US indices hit record highs in the wake of a lower-than-expected inflation reading," said Scope Markets analyst Joshua Mahony.

"The FTSE 100 in particular has been hindered by the heavy weighting of energy stocks this morning, with sharp declines for both Shell and BP coming off the back of an oil price decline that saw WTI fall into a two-month low yesterday."

"Thankfully, that weakness in the energy space does bode well for inflation, helping to drive down expectations after a concerning first few months of 2024. Notably, after a two-month period of FTSE outperformance, May has started to see that pattern reverse as US markets start to regain their foothold as the go to place for investors."

In economic news, Japan’s economy unexpectedly shrank in the first quarter as consumers tightened their belts in response to stagnant wage growth, companies cut spending and exports fell.

Gross domestic product contracted 2% on an annualised basis in the three months to March 30, the Cabinet Office said on Thursday. The figure compares with a forecast contraction of 1.2% and now clouds the outlook for the Bank of Japan’s plans to lift interest rates.

In equity news, auto giants BMW and Daimler Truck fell as they traded without entitlement to a dividend.

French video game maker Ubisoft slumped after first-half net bookings missed estimates.

Sage Group shares were well into the red on Thursday morning, despite reporting a robust first-half performance, as the company downgraded its guidance.

BT Group surged as the company reported better-than-expected cash flow and lifted its dividend.

Watches of Switzerland gained 15% on a rise in fourth-quarter sales.

BT jumped despite the telecoms giant reporting a 31% drop in annual profits in the year to 31 March, as it laid out plans to save £3bn of costs a year by the end of the decade.

Reporting by Frank Prenesti for Sharecast.com