Europe open: Shares edge lower on US CPI, hawkish Fed comments

European shares edged lower at the opening after a hotter-than-expected US CPI reading led to renewed calls for higher interest rates from Fed officials.

The pan-European Stoxx 600 index was down 0.26% at 0825 GMT with major markets mixed. Britain’s FTSE index was lower despite inflation falling further than forecasts.

January's US CPI rose by 0.5% month-on-month - a tenth of a percentage point more than anticipated by economists. At the core level meanwhile, CPI increased 0.4% on the month, ahead of consensus estimates for a jump of 0.3%.

The print was followed by hawkish comments from Dallas Fed chief Lori Logan Thomas Barkin of the Richmond Fed, who both said that rates would probably have to stay higher for longer to fight inflation.

In the UK, consumer price inflation eased more than expected in January, according to figures released on Wednesday by the Office for National Statistics.

The annual rate of CPI fell to 10.1.% in January from 10.5% in December, coming in below analysts' expectations of 10.3%. This was the third drop in three months, after CPI hit a 41-year high of 11.1% in October 2022.

The ONS said the largest downward contribution came from transport - particularly passenger transport and motor fuels - and restaurants and hotels, helping to offset rising prices in alcoholic beverages and tobacco.

In equity news, Barclays shares fell as the bank reported a 14% fall in annual profit.

Glencore was also lower despite declared a $7.1 billion payout to shareholders after a record trading profit.

Hargreaves Lansdown gained as the financial services platform posted strong growth on both its top and bottom lines at the first half-year stage, despite the impact from "challenging" external conditions and low investor confidence on asset values and stockbroking volumes.

Reporting by Frank Prenesti for Sharecast.com