Europe midday: Stocks rise on UK retail and Eurozone inflation data

UK retail sales worsened in October – marking the 19th monthly contraction – while inflation estimates from the Eurozone were unrevised, confirming initial figures that showed a huge drop in price pressures.

The Stoxx 600 index was 1.1% higher at 456.32 just after midday CET, rising to levels not seen since 20 September, with broad-based gains across the continent's major indices.

Markets react positively to UK and Eurozone data

UK retail sales declined by 0.3% in October after a revised 1.1% drop the previous month with volumes dropping to their lowest since February 2021. Analysts were expecting a 0.3% gain.

The positive reaction on London's FTSE 100 – up 0.9% in morning trade – "highlights the hope that this weak spending environment helps drive down inflation, with the Bank of England undoubtedly happy to see consumers put pressure on businesses to compete on price once again," said analyst Joshua Mahony from Scope Markets.

Meanwhile, analysts at Oxford Economics said: "UK inflation fell by more than the BoE expected in October, while pay growth continued to ease, reinforcing the likelihood that the next move in interest rates is set to be down."

In other news, secondary estimates for the Eurozone consumer price index in October confirmed the initial figures, showing that headline annual inflation was unchanged from the initial estimates at 2.9% for October, down from 4.3% in September. Core inflation was line with the initial estimate at 4.2%, down from 4.5% the previous month.

Economist Claus Vistesen from Pantheon Macroeconomics expects inflation to undershoot the ECB’s forecasts next year, with core inflation to reach 2.5% by the end of the first quarter. "This is more quickly than the ECB expected in September, guiding our view that the ECB will have room to cut its policy rate earlier than markets expect, in March," he said.

Oil prices were attempting to rebound after a huge tumble on Thursday on the back of reports of higher supply in the US and weak demand from China. Brent crude dropped over 4% to $77.42 a barrel, but was trading 1% higher at $78.20 on Friday.

Banks and oil stocks lead the rise

Banks across the continent were performing well in morning trade, with BNP Paribas, Societe Generale, HSBC, Barclays, Bankinter and Banca Monte dei Paschi di Siena all putting in decent gains.

Oil stocks were higher after heavy falls the previous session as crude prices slid. Shell, TotalEnergies, Repsol and BP were all trading in positive territory.

Also attempting a recovering was Burberry after an 11% drop on Thursday following warning about a luxury slowdown, with sales falling in China. Burberry rose 1.5% in London, while European peers LVMH, Hermes, Christian Dior, Moncler and Kering – which all declined the previous session – were also bouncing back.

Siemens AG was also higher, extending gains after delivering record fourth-quarter results on Thursday.