Europe midday: Shares stay red as UK GDP, US inflation hit sentiment

European stocks were sharply lower at midday on Thursday, following heavy losses on Wall Street overnight sparked by persistent US inflation data and weak UK GDP figures.

The pan-European Stoxx 600 index was down 2.2% with all regional bourses in negative territory. US futures were indicating another day of losses.

Britain’s FTSE 100 fell 2.35% after official data showed the UK economy shrank by 0.1% in March, despite claims from Prime Minister Boris Johnson that the country would have the fastest rate of growth in the G7.

First quarter GDP grew by 0.8%, missing forecasts for a rise of 1% and down from the 1.3% expansion posted in the fourth quarter of 2021. The annual reading was also below expectations at 8.7% against estimates of 9%.

“Risk-off sentiment is gripping European markets, which have opened sharply lower dragged down by the tech-driven sell-off on Wall Street last night after US inflation data came in hotter than expected. All European sectors are in the red this morning with basic resources leading the declines,” said Victoria Scholar at Interactive Investor.

In equity news, Hargreaves Lansdown was a major faller, down more than 7% after it reported a drop in assets under management and net new business for the four months to April 30.

Rolls-Royce bucked the trend, with shares up as the aerospace firm traded in line with expectations in the first four months of the year, helped by a gradual return to flying and increased government investment in defence.

BT rallied as the telecoms and broadcasting group said it was moving its sports TV division into a 50-50 joint venture with Warner Bros Discovery and reported a small rise in adjusted annual core earnings after revenue fell 2%.

Retailer JD Sports gained as it said like-for-like sales were more than 5% higher year-on-year, driven by both the "strength and breadth" of its brand relationships and category offerings.

Commerzbank fell despite confirming its full-year net profit target of more than €1bn.