Europe midday: Shares pare losses ahead of ECB meeting
European shares had trimmed losses mid-way through the session sharply lower on Thursday as investors awaited the European Central Bank's meeting later in the day.
The pan-European Stoxx 600 index fell was down 0.37% after being 1% lower in early deals with all major regional bourses in the red. Traders are looking for any signs on future tightening from the ECB to counter spiralling inflation.
CMC Markets analyst Michael Hewson said that although no change in policy expected “ECB President Christine Lagarde will use her time to tee the markets up for a policy move next month”.
“The current situation presents a huge problem for the ECB, and its credibility, because if they signal a more aggressive tightening path, bond spreads in countries like Italy may start to rise to levels that are hugely problematic for debt funding purposes.”
Asian shares slipped overnight as new Covid restrictions were introduced in Shanghai. This in turn placed mining stocks in Europe under pressure on renewed fears of a slowdown in China.
“Oil prices are under pressure after fresh lockdown measures were imposed in Shanghai as part of Beijing’s draconian zero-tolerance approach to Covid," said Victoria Scholar, head of investment at Interactive Investor.
"Although the world’s second largest economy had been starting to ease some of its covid restrictions lately, this switch to ramping up measures once again has sparked nervousness about the potential for softer demand, pushing Chinese equities and oil prices into the red."
In equity news, British American Tobacco fell after the company warned of a hit to sales from the Ukraine war and a UK government review recommended a rise in the legal tobacco selling age from 18 by one year, every year.
Shares in food and beverage ingredients provider Tate & Lyle rose as the company reported "strong top-line growth" in the year ended 31 March, with both revenue and profits growing on an adjusted basis.