Europe open: Shares lower as German data, hawkish central banks hit sentiment

European shares opened lower on Friday as investors digested rate news from central banks this week, while weaker German business activity survey data also dampened sentiment.

The pan-European Stoxx 600 index fell 0.4% in early deals with all major bourses lower. Shares were mixed in Asia after the Bank of Japan remained an outlier and kept rates at 0.1% - a sharp contrast with the US and UK, which held paused a run of rate rises, but stayed hawkish on inflation and growth prospects.

Meanwhile, German business activity fell for the third consecutive month in September due to a sustained decline in demand for goods and services, pointing to a "deep" economic contraction in the quarter, a preliminary survey showed.

The HCOB/S&P global German flash composite purchasing managers' index rose to 46.2 in September from August's 44.6, but below the 47.2 forecasts by economists.

In the UK, retail sales fell by 1.4% year-on-year in August, missing analysts’ expectations for a drop of 1.2%. On a monthly basis, retail sales rose by 0.4% - a sharp rebound from the 1.1% fall recorded in a rain soaked July. Food and clothing sales provided the boost, although internet sales fell as shoppers headed back to physical stores. Automotive fuel sales fell by 1.2% in August, linked to the significant increase in petrol and diesel prices.

In equity news, shares in Ubisoft rose as Britain's competition regulator said Microsoft's revised effort to get its £55bn takeover of Activision Blizzard "substantially addresses previous concerns."

The new remedy would see Call of Duty maker Activision's cloud streaming rights outside of the EU being sold to Ubisoft.

Reporting by Frank Prenesti for Sharecast.com