Europe midday: Shares flat as BoE holds rates, but sees Q1 GDP growth

European stocks were flat on Wednesday as the Bank of England held interest rates steady, in line with expectations, and said the UK economy may have pulled out of recession into growth during the first quarter of the year.

The pan-European Stoxx 600 index was down 0.02% to 515.64. Germany's DAX and the UK's FTSE 100 both continued their bullish run of recent weeks, bucking the weaker trend of the day.

UK interest rates were left on hold at 5.25% for the sixth time in a row, with the nine members of the bank's Monetary Policy Committee voting 7-2 against a cut.

It added that inflation was expected to return to close to the 2% target in the near term, "but to increase slightly in the second half of this year, to around 2½%, owing to the unwinding of energy-related base effects".

"There continue to be upside risks to the near-term inflation outlook from geopolitical factors, although developments in the Middle East have had a limited impact on oil prices so far."

"Following modest weakness last year, UK GDP is expected to have risen by 0.4% in 2024 Q1 and to grow by 0.2% in Q2."

Official GDP figures will be published on Friday morning.

In other economic news, China’s exports rose 1.5% in April, while imports surged 8.4%, beating forecasts, according to data released by the customs agency on Thursday.

Economists had tipped imports to increase 4.8%. The figure also reversed a 1.9% fall in March.

In equity news, weapons maker oil and gas explorer Harbour Energy surged to the top of the Stoxx as the company hiked its full-year dividend and said its takeover of German rival Wintershall was "on track" to complete in Q4.

BAE Systems held annual guidance and said global geopolitical tensions should boost orders as countries increased defence spending.

Spanish bank Sabadell jumped after rival BBVA presented a €12.23bn takeover bid directly to shareholders, even though the former's board already rejected the proposal. BBVA shares were down 5.4%.

Belgian pharmaceutical firm ARGX slumped almost 10% after reporting first-quarter earnings, while Italian payments group Nexi jumped 6% after a larger-than-forecast rise in first-quarter core profit.

BE Semiconductor Industries was higher after announcing it received order for 26 hybrid bonding systems.

Reporting by Frank Prenesti for Sharecast.com