Europe midday: Stocks hold higher ahead of US CPI data

European stocks were on the front foot on Tuesday as they returned from their long weekend break and played catch up after Monday's gains, with traders focused on the latest US CPI data due for release later in the session.

As of 11:50 Germany's DAX was up by 0.56% or 34.27 points to reach 9,966.78 and France CAC up 0.01% or 4.25 points to 4,316.86, with Spain's Ibex rising 0.38% or 32.80 points and at 8,714.90.

Also in focus were the on-going negotiations between European capitals and the International Monetary Fund on the degree of debt relief which Athens should be given, which in turn might determine to what extent, or not, the IMF would participate in the country’s next rescue package.

Involvement by the IMF was considered key for keeping Athens on the straight and narrow and hence protecting the credibility of any programme. Washington was also keen to avoid any renewed flare-ups in the Greek crisis given the already tense situation elsewhere and politically in the wider euro area, The Wall Street Journal reported.

The Eurozone’s trade surplus with the rest of the world increased from €20.6bn in February to €22.3bn in March (consensus: €22bn), data from Eurostat showed.

Oil prices slipped, with Brent crude down 0.246% to $48.85 per barrel and West Texas Intermediate 0.063% higher to $47.75 per barrel in ICE trading.

Consumer price inflation in Britain slowed to a 0.3% year-on-year clip in April, missing forecasts for a rise of 0.5% by a wide margin.

“The sharp fall in inflation in April is not a signal that inflation pressure is easing. The fall mainly reflected a decline in airline fares inflation […] The other main downward influence on inflation was a fall in clothing inflation which merely seems to reflect retailers discounting in response to unusually bad weather.

“Sterling’s decline has boosted apparel retailers’ costs and will compel them to raise their prices soon,” Samuel Tombs, chief UK economist at Pantheon Macroeconomics said in a research note sent to clients.

US inflation is also due at 1330 BST. In contrast to the UK, CPI is expected to pick-up to 0.3% month-on-month growth in April from 0.1% in March. On a year-on-year basis CPI is forecast to rise 1.1% in April following a 0.9% increase a month earlier.

The Federal Reserve is targeting 2% inflation and will be taking the data into consideration ahead of its next decision on interest rates in June.

Among corporate stocks, Vodafone shares gained after the company’s organic sales returned to growth and beat expectations in the full year after a strong performance in the fourth quarter, hiking the final dividend 2%.