Europe midday: UK GDP gives lift, but Burberry warning hits luxury stocks

European shares were higher as investors shrugged off higher-than-expected US inflation data and digested strong growth figures from the UK, while luxury stocks were hit by a profit warning at Burberry as demand for its products slumped.

The pan-European Stoxx 600 index was up 0.67% at 477.18 with all major regional bourses in the green. US and Asia markets were mixed overnight after December’s US inflation reading showed a consumer prices rose 0.3% on a monthly basis and 3.4% year on year. Forecasts had been for readings of 0.2% and 3.2%, respectively.

In the UK, GDP grew by 0.3% in November following a 0.3% contraction in October. This was ahead of economists’ expectations for a 0.2% expansion.

Oil prices rose on the back of rising geopolitical tensions as Iran reportedly captured an oil tanker off the coast of Oman in response to sanctions and US and UK airstrikes on rebel Houthi targets in Yemen also caused concern among commodity traders.

Brent crude rose 2.27% to $79 a barrel, while West Texas Intermediate was up 2.4% to $73.75.

In China, consumer prices improved slightly but were still deflationary for the third consecutive month in December, as the recovery in the world’s second biggest economy continued to struggle.

The consumer price index fell 0.3% year on year last month, better than expectations of a 0.4% decline and against a November decrease of 0.5%.

In equity news, shares in luxury goods makers were under pressure after UK Brand Burberry issued a profits warning amid slumping demand for its products. Shares in sector peers LVMH, Kering and Richemont and Christian Dior all fell on the news.

Reporting by Frank Prenesti for Sharecast.com