Europe open: Shares up on US data, Dechra Pharma bid talks

European markets edged ahead at the open on Friday as investors digested softer-than-expected US producer prices data and turned their attention to American retail sales, while animal drug maker Dechra Pharmaceuticals surged on a potential £4bn takeover.

The pan-European Stoxx 600 index was up 0.33% in early deals, with all major bourses higher. Sentiment was boosted after the US Producer Prices Index for March – seen as a key measure of consumer inflation - fell by 0.5% against expectations for a flat reading, rising by 2.7% year-on-year from 4.9% in February and against forecasts of a 3.4% rise.

“While the consensus remains that there is one more (rate) hike of 0.25% to come in May, there are no more rate rises expected thereafter this year. Indeed, some are projecting that interest rate cuts could follow before the end of the year, depending on the severity of the recession which is expected to follow, although this is not currently the Federal Reserve’s base case,” said Interactive Investor head of markets Richard Hunter.

In equity news, shares in Dechra soared by almost 40% after revealing late on Thursday that the veterinary drug maker had entered talks with Swedish private equity group EQT to discuss a possible all-cash, £4.63bn deal.

Shares in Hermes gained as the Birkin bag maker reported a 23% rise in first quarter sales.

Reporting by Frank Prenesti for Sharecast.com