Europe open: Shares shrug off UK inflation, geopolitical tensions

European shares made a strong start on Wednesday despite an unexpected spike in UK inflation and continuing geopolitical tensions.

The pan-European Stoxx 600 index was up 0.6% to 503.52 with all major bourses higher.

Sentiment was dented on Tuesday after Russia issued a new nuclear doctrine, effectively threatening the West with retaliation after Ukraine used long-range missiles made in the US to attack Russian territory directly.

“The initial reaction to comments suggesting that the threshold for the use of nuclear weapons had lowered understandably sideswiped markets, with a move to haven assets such as gold and Treasury bonds, lowering yields as prices rose,” said Interactive Investor head of markets Richard Hunter.

“More conciliatory remarks from a Russian official later soothed nerves, although the tension over recent days has risen, let alone any concerns over how the new administration in the US might react to the rhetoric.”

In economic news, UK inflation jumped past the Bank of England's target in October after energy bills rose, according to data released on Wednesday by the Office for National Statistics.

The consumer price index rose at an annual rate of 2.3% in October, up from 1.7% in September and above the 2.2% expected by economists.

This was also above the Bank of England's 2% target, and was put down to higher electricity and gas prices.

Meanwhile German producer prices fell 1.1% in October as energy costs declined, according to official data published on Wednesday.

Energy prices were 5.6% lower year on year but rose 0.6% compared with September 2024. Across all customer groups, natural gas prices declined by 10.1% from October 2023 and were up 1.1% on September 2024, said the federal statistics office Destatis.

On the equities front, traders are wide-eyed with anticipation awaiting the latest results in the US from tech darling Nvidia.

In equity news, shares in Grifols gained as the Spanish drugmaker rejected Brookfield Asset Management’s indicative offer, which values the firm at €6.45bn.

Sage Group surged to the top of the Stoxx as it posted a 21% rise in full-year underlying operating profit and announced a share buyback of up to £400m.

Reporting by Frank Prenesti for Sharecast.com