Europe midday: Shares slide off highs on EZ GDP data, Ukraine worries

The pan-European Stoxx 600 was up 0.47% in early deals after a battering last week as investors fretted about higher interest rates and the Ukraine/Russia border crisis.

Concerns over gas supplies to western Europe continued as the UK said it was "highly likely" that Russia was looking to invade Ukraine and the head of NATO said the continent needed to diversify its energy supplies.

Britain is expected to be the latest country to tighten monetary policy, with economists expecting a rise in interest rates to 0.5% from 0.25% in an attempt to put the brakes on inflation.

"The decision also comes at a fragile time, with the associated additional costs for businesses weighing against the assumed rise in hospitality and to some extent consumer sales, as the (Omicron Covid) variant begins to subside and restrictions have all but disappeared,” said Interactive Investor head of markets Richard Hunter.

Meanwhile, the European Central Bank holds its February meeting as well with inflation expected to again dominate the agenda.

“We do not expect any clear policy signals or decisions given that the council made major changes only in December. But the press conference may offer early clues on whether a gradual shift to a more hawkish stance is underway in the council,” said analysts at Oxford Economics.

“Doves will point to a January inflation print that is likely to show a sharp fall in core inflation on the back of large base effects and to still subdued wage growth. Hawks will point to energy prices that are well above levels assumed in the ECB forecasts and to lingering supply bottlenecks. This could keep inflation higher for longer and eventually lead to undue second round effects on wages.”

Economic growth across the eurozone slowed at the end of 2021, as the Covid Omicron variant hindered the recovery from the pandemic, according to official data released on Monday.

GDP across the single currency area rose by 0.3% in the October-December quarter, a marked slowdown from the 2.3% expansion recorded in the preceding three months.

In equity markets, Vodafone shares gained on reports the telecoms company has been targeted by activist investor Cevian, putting management under pressure to revamp its struggling performance.

The Sweden-based investment firm has built up holdings in the communications giant in recent months, which has seen its share price almost halved in value since 2018.

Pearson rose after saying it had bought the remaining 80% of skills verification operator Credly it does not own for an undisclosed sum.

Barratt Development shares gained on a report over the weekend that the housebuilders was set to announce its first significant corporate acquisition for years and also announcing the acquisition of Gladman Developments in a £250m deal.

Elsewhere, British Airways and Iberia parent IAG flew higher after Morgan Stanley resumed coverage of the shares at ‘overweight’.

On the downside, miners were among the worst performers as copper prices fell, with Rio Tinto, Anglo American and Glencore all down.