Europe open: Shares lower despite US, Asia rally; Eyes on UK Budget

European shares fell at the open on Wednesday despite strong showings in the US and Asia overnight.

The pan-regional Stoxx 600 index was down 0.53% at 0845 GMT, halting a rally as worries over the financial stability of US banks eased after the collapse of Silicon Valley Bank and data showing US inflation was cooling. Wall Street futures were mixed.

Investors are also eyeing UK later in the day when Finance Minister Jeremy Hunt presents the spring Budget as he tries to find a way to boost Britain’s flagging economy.

"With a keen eye on trying to maintain financial stability particularly the close shave this week given SVB’s collapse, he looks set to focus on highly targeted policies, rather than tax cuts to propel growth," said Hargreaves Lansdown analyst Susannah Streeter.

"He has more wiggle room as public sector borrowing, still high by historical standards is set to undershoot forecasts made by the Office of Budget Responsibility. Labour shortages mean high inflation is stubborn and he’ll be trying to coax people back to work with a combination of sweets and a naughty step approach, with a widening of sanctions expected for those who don’t look for work."

In other economic news, a deluge of data from China showed retail sales growth for the first two months of the year in line matched expectations, while real estate investment fell further.

Industrial production for the January-February period rose by 2.4%, less than the 2.6% expected.

Retail sales climbed by 3.5%, in-line with expectations. Most categories within the data rose, but autos and home appliances saw sales decline. Online retail sales of physical goods rose by 5.3% for the first two months of the year from a year ago.

Fixed asset investment rose by 5.5%, topping expectations for 4.4% growth.

In equity markets, shares in Asia-focused insurer Prudential slid even as it reported a better-than-expected rise in annual profit on the back of new insurance sales and said China’s relaxation of Covid restrictions had also provided a boost.

Online trading platform IG Group was in the red as it said third-quarter trading revenue fell amid lower market volatility.

Fashion retailer H&M fell, despite reporting a 12% increase in December-February net sales.

Europe's biggest operator of energy networks E.ON gained following its latest earnings release and new investment plan.

Germany speciality chemicals maker Lanxess fell after forecasting lower first-quarter core profit and 2023 earnings.

Reporting by Frank Prenesti for Sharecast.com