Europe open: Shares up ahead of crucial US CPI data

European shares were higher at the open on Tuesday as all focus was on a crucial US CPI reading to provide a key signpost on the future path of interest rates and whether inflation was truly coming off the boil.

The pan-regional Stoxx 600 index was up 0.28% at 0830 GMT with all major bourses higher on the back of a strong US session on Wall Street.

Sentiment was boosted by the European Commission’s assessment that the bloc may have narrowly avoided a recession, and fiscal rules on spending and budget deficits, relaxed as the Covid pandemic and subsequent inflation wrought havoc, were expected to be reimposed.

“One of the biggest developments is that gas shortage fears have faded, which together with record low unemployment means economic contraction is less likely,” said Hargreaves Lansdown analyst Sophie Lund-Yates.

“The other positive needle in the haystack of geopolitical turmoil, is that peak inflation is now behind the EU, according to the EU’s economic commissioner.”

In the UK, official data showed that regular pay grew more than expected in the final three months of last year, but real pay kept falling.

The unemployment rate was stable at 3.7% in December, while annual wage growth rose by 6.7% in the period between October and December, up from 6.5% and ahead of expectations for it to remain flat. The ONS said this was the fastest rate of growth seen outside of the pandemic.

Taking into account inflation, however, this marked a 2.5% decline.

Growth in average total pay including bonuses was 5.9%, down from 6.5%. Taking into account inflation, this was a 3.1% decline. "This is smaller than the record fall in real total pay we saw in February to April 2009 (4.5%), but remains among the largest falls in growth since comparable records began in 2001," the ONS said.

In equity news, shares in Vodafone rose after John Malone's Liberty Global said it had bought almost 5% in the UK telecoms operator after the market closed on Monday.

Liberty Global, which owns half of Virgin Media O2, a major rival to Vodafone in the UK, ruled out making a takeover bid.

TUI shares gained as the travel giant narrowed losses and reported strong summer bookings. Budget airline easyJet flew higher on the sentiment.

Coca-Cola HBC shares fizzed as the bottler reported a better-than-expected operating profit for 2022, helped by higher prices and cost-saving measures.

Reporting by Frank Prenesti for Sharecast.com