Europe midday: Shares lower as eyes turn to rate decisions

European shares were lower on Monday after falls on Wall Street on Friday and weak Asian markets overnight ahead of a data dump and interest rate decisions this week.

The pan-regional Stoxx 600 index was down 0.35% at 1150 GMT. Britain's FTSE 100 was lower after official data showed the economy returned to growth in October but is still heading for recession.

GDP grew 0.5% in October following a 0.6% contraction in September, when it took a hit from the funeral of Queen Elizabeth. This was a touch ahead of economists’ expectations for 0.4% growth.

In the three months to October, however, the economy shrank by 0.3%, versus expectations of a 0.4% contraction. This marked the biggest decline since early 2021.

Markets are braced for interest rate decisions in the US and eurozone this week.

“US markets faltered as investors gear up for another pivotal week of economic releases,” said Interactive Investor head of markets Richard Hunter.

“The fragility of recent rebounds was highlighted as fresh risk-off sentiment emerged ahead of an inflation print this week, followed by the latest Federal Reserve decision on interest rates. The two announcements are intertwined, with any prolonged heat on the inflation number providing the Fed with more ammunition to maintain its hawkish view.”

The European Central Bank is set to take its deposit rate up by 50 basis points to 2%, despite the euro zone economy almost certainly being in recession, as it battles inflation running at five times its target.

In equity news, Chr. Hansen shares soared after it agreed to combine with biotech firm Novozymes and in what will be the biggest-ever merger between two Danish companies. Novozymes shares fell 12.5%.

Shares in London Stock Exchange gained after Microsoft agreed to take 4% in the UK exchange operator as part of deal to migrate the bourse operator's data platform into the cloud.

Sanofi rose after the French health group dropped plans to bid for Horizon Therapeutics.

Reporting by Frank Prenesti for Sharecast.com