Europe midday: Shares higher as China eases Covid curbs; UK set for recession

European shares were higher on Friday, boosted by news that China was easing Covid restrictions.

The Stoxx 600 index was up 0.28% at 11.40 GMT, with all major markets up. China’s Covid easing included shortening quarantines by two days for close contacts of infected people and for inbound travellers and removing a penalty for airlines for bringing in too many cases.

Market sentiment was also lifted by a smaller-than-expected rise in October US inflation increased hopes of less aggressive interest rate hikes from the Federal Reserve.

In economic news, German harmonised inflation for October was confirmed at 11.6% and the UK economy contracted by 0.2% in the third quarter as a long recession loomed.

“With pressures from the cost-of-living crisis, the war in Ukraine and rising interest rates, the UK economy appears to be on track to fall into a recession by the fourth quarter, in what could be the longest period of economic contraction in at least a century,” said Interactive Investor head of investment Victoria Scholar.

In equity news, Swiss luxury group Richemont surged more than 10%after reporting better-than-expected sales and margins.

That news and the potential reopening of China, lifted sector peers LVMH, Kering, Pernod Ricard and Hermes International. Asia-focused insurer Prudential.

Shares in Dutch tank storage company Vopak surged 20% as the company raised its core profit and operating cash return outlook for the full year, citing supportive business conditions and currency gains.

Reporting by Frank Prenesti for Sharecast.com