Europe midday: Shares on hold as UK Covid worries dampen sentiment
European shares were slightly lower at midday on Wednesday’s as China inflation data and a rising number of UK Covid cases kept a lid on sentiment.
The pan-European Stoxx 600 index was down 0.03% as investors also kept an eye on a European Central Bank policy decision and US inflation data later this week.
A surge in cases of the India variant in the north of England stoked fears that the British government might have to delay the next easing of restrictions on June 21. The FTSE 100 index was down 0.55% on the news.
China’s producer price index (PPI) for May jumped 9% from a year earlier, against expectations of an 8.5% increase. The country’s consumer price index in May rose 1.3% from a year earlier, lower than an expected 1.6% rise.
“While some of the (PPI) rise can be attributed to base effects due to the huge slide in commodity prices that we saw in March and April last year which saw PPI decline -3.7%, there is increasing evidence that various supply side issues are starting to create a situation where rather than being transitory, inflation pressures could become more persistent,” said CMC Markets analyst Michael Hewson.
“It is certainly something Chinese business is becoming more concerned about, along with Chinese authorities given recent steps to curb the recent sharp rise in commodity prices.”
In equity news, shares in Sweden's Sinch, the cloud communication services provider backed by Softbank, rose 5.6% after the company agreed to buy Australia-based mobile messaging platform MessageMedia in a $1.3bn deal.
The deal will see Sinch pay the sellers, which include funds managed by Mercury Capital, $1.1bn in cash and 1.1m new shares.
Travel food outlet operator SSP Group rose after the company reported wider interim losses due to the pandemic, but said trading in the UK and North America had improved since the end of March as vaccine rollouts accelerated.
Airlines were also higher after the US CDC said it was easing travel recommendations on 110 countries and territories. Air France KLM, Lufthansa and British Airways-owner IAG all posted gains, as did Aeroports de Paris and Fraport.
Artificial hip and knee maker Smith & Nephew rose after an upgrade to ‘outperform’ at Credit Suisse.
Spanish retail giant Inditex rose after reporting a forecast-busting first-quarter net profit of €421m.