Europe midday: Shares pare gains; Straumann surges on outlook upgrade

European shares pared gains at lunchtime as investors digested, eurozone data, a rise in UK inflation and the surprise resignation of Japanese Prime Minister Fumio Kishida.

The pan-regional Stoxx 600 index was up 0.2% at 502.

The eurozone economy grew by 0.3% in the second quarter on a seasonally adjusted basis, according to a flash estimate published on Wednesday.

Gross domestic product grew by the same figure for the broader European Union, the official Eurostat statistical added.

In a separate release, seasonally adjusted industrial production fell 0.1% month on in the euro area and remained unchanged in the EU.

In other economic news, UK consumer price inflation rose in July for the first time since December, albeit less than expected.

According to figures released on Wednesday by the Office for National Statistics, CPI rose by 2.2%, up from 2% in June and May but coming in below expectations of 2.3%. It is now back above the Bank of England’s 2% target.

The moved sparked optimism that the Bank of England may move to cut interest rates next month.

“UK inflation has not yet been tamed, veering away from target but not by as much as feared. The effects of energy price changes, with bills falling by less than July last year was the main driver upwards,” said Hargreaves Lansdown analyst Susannah Streeter.

“But the Bank of England will be encouraged by the direction of travel for core inflation, which strips out volatile fuel and food prices as it dipped to 3.3% from 3.5%. The pound dropped a little against the dollar from $1.285 to $1.282 as bets increased slightly on further rate cuts this year.”

“However, with prices still more unruly, Bank of England policymakers are still set to sit on their hands in September and are not expected to cut rates until November.”

Meanwhile in Japan, Kishida said he would not seek re-election as leader of the ruling Liberal Democratic Party (LDP), saying it needed a "new start", as his poll ratings plunged amid a corruption scandal involving his party, rising living costs and falling yen.

The 67-year-old LDP veteran is expected to step down as PM after the party elects a new leader in September.

In equity news, shares in Straumann put a smile on investors faces as the Swiss dental firm lifted guidance and said it was selling its DrSmile aligner business. The stock was up almost 15% in morning trade.

Playtech surged after confirming it is in talks with Flutter Entertainment about the possible sale of its Italian business, Snaitech. Flutter stock was also on the march on the news.

Reporting by Frank Prenesti for Sharecast.com