Europe open: Shares higher as Fed minutes, corporate earnings digested

European markets were slightly higher on Thursday morning as investors digested minutes released by the US Federal Reserve showing more interest rate hikes would be used to fight inflation, while a corporate earnings dump also drove sentiment.

The pan-European Stoxx 600 index was up 0.23% in early deals with most major markets higher, bar Britain's FTSE 100, which was down 0.23%.

Inflation “remained well above” the Fed’s 2% target and the labor market “remained very tight, contributing to continuing upward pressures on wages and prices,” according to the minutes.

OANDA analyst Craig Erlam said that while he took Fed commentary "with a relative pinch of salt", keeping financial conditions tight "may well indicate that at least a few hikes are planned and any hope of cuts this year are, as communicated, slim".

"That could be the difference between a recession and a soft landing, although again, I take these warnings with a large pinch of salt. If January proves to be a blip in the data due in part to warmer weather - and the fact that bumps in the road back to 2% were always highly likely - we could quickly see market pricing shift once more," he said.

"And we'll get another full round of data before the next meeting which will give us a much better idea of whether this is a blip or a trend."

In earnings news, aircraft engine maker Rolls-Royce surged 15% after reporting a rise in operating profits as the rebound in post pandemic international travel boosted flying hours for its engines.

Animal genetics company Genus was also higher on increased annual profit.

Paper and packaging firm Mondi fell after warning of softer demand and pricing in the current year, despite posting higher profits in 2022.

Reporting by Frank Prenesti for Sharecast.com