Europe midday: Shares pare losses as Currys takeover talk in focus

European shares pared losses on Monday with US markets closed for the Presidents Day holiday and investors eyeing a potential two-way battle for struggling UK electrical retailer Currys.

The pan-European Stoxx 600 index was flat at 491 after being 0.14% lower in early deals after making strong gains last week. China shares rose as traders returned from the Lunar New Year holidays with sentiment boosted by upbeat travel data.

"With a key (US) inflation reading, the producer prices index, coming in hotter than expected on Friday, investor hopes of rapid cuts to interest rates by the Federal Reserve have cooled off, leading to more risk-off sentiment," said Hargreaves Lansdown analyst Susannah Streeter.

"Friday falls on Wall Street, have prompted wariness in London, with not much cheer emanating from Asia. Brent Crude has headed lower, as investors assess demand prospects going forward, if borrowing costs stay high in the United States, particularly with the Chinese economy showing little sign of powering up any time soon."

In equity news, Currys was at the centre of a potential takeover battle between US private equity outfit Elliott and Chinese ecommerce giant JD.com. Currys management said it had already rejected a £700m approach from the former, claiming it "significantly undervalued" the chain. Shares in the chain surged by 35%.

Shares in AstraZeneca rose after the US Food and Drug Administration approved use of the company’s blockbuster cancer drug Tagrisso with chemotherapy to treat a type of lung cancer.

Meantime, shares of German IT company Bechtle were lower after Barclays rated the stock as “underweight”.

Reporting by Frank Prenesti for Sharecast.com