Europe open: Shares make strong start on China reopening hopes

European shares made a positive start on Tuesday on the back of strong gains in Asia as investors punted on a potential lifting of Covid restrictions in China.

The pan-European Stoxx 600 index rose was up 0.86% in early deals after closing flat on Monday.

Investors were cheered by news that the city of Shanghai had gone three straight days with no new Covid-19 cases outside quarantine zones.

On the economic data front, the UK unemployment rate declined to a 48-year low in the first three months of the year, but wages were squeezed by surging inflation, according to data released by the Office for National Statistics.

The unemployment rate fell from 3.8% in the previous quarter to 3.7% - its lowest level since 1974. Analysts had been expecting it to hold steady at 3.8%.

At the same time, total earnings growth rose to 7% in March from 5.6% in February, but regular earnings growth excluding bonuses only ticked up to 4.2% from 4.1%. Adjusted for prices, average earnings excluding bonuses fell by 1.9% from a year earlier, marking the biggest drop since 2013.

In equity news, French power group ENGIE gained after it posted higher first-quarter profits and raised its 2022 outlook. The company also said it was in talks with Russia's Gazprom regarding changing the payment scheme for Russian gas supplies.

Daimler Truck Holding rose on increasing its forecast for 2022 revenues to €48bn-50bn from €45.5bn-47.5bn, with a record-high order backlog enabling it to push up prices.

Shares in Vodafone fell after forecasting earnings growth for the current year below market expectations.

Clariant climbed more than 7% to top the Stoxx 600 after the Swiss chemicals company announced that its delayed full-year earnings report will be published on May 19, and that it will end a governance agreement with largest shareholder Saudi Basic Industries Corporation (SABIC).

Imperial Brands gained despite reporting lower profits and flat sales for the first half.