Europe midday: Shares hold gains ahead of US inflation data

(Sharecast News) - European shares opened higher on Thursday ahead of a key US inflation report and news that the UK economy grew more than expected in May. The pan-European Stoxx 600 index was up 0.3% to 517.96. US inflation readings are due later in the day.

Flash figures showed the UK economy grew by 0.4% in May, compared with zero growth in April and ahead of a 0.2% forecast.

Leading the improvement was the construction sector, which grew at its fastest rate in almost a year. It reversed April's 1.1% slide - when wet weather hit activity - with a 1.9% uplift.

Production output also improved, however, nudging up 0.2% following a 0.9% decline a month earlier.

Services growth was unchanged at 0.3%.

In the three months to May, GDP rose by 0.9%, driven by a 1.1% uplift in services output. It was the quickest pace of growth for over two years, the ONS noted.

Meanwhile in Germany, inflation was confirmed at 2.2% in June, down from 2.4% in May, the federal statistics agency said on Thursday.

On a harmonised basis to compare with other European Union countries, consumer prices eased to 2.5% on the same month a year earlier, up 0.2% on the previous month.

"US investors have been putting their chips on the table and betting on inflation's path ahead of today's CPI print. Tech and Semi stocks led the way as both the S&P 500 and Nasdaq continued their unwavering run," said Hargreaves Lansdown analyst Matt Britzman.

"Investors have voted with their dollars, banking on today's inflation data behaving as expected. Core CPI, which strips out more volatile food and energy prices, is expected to rise 0.2% from May and 3.4% since June last year."

"Comments from Fed Chair Jay Powell have also brought renewed optimism that cuts could come as soon as September, with the Fed perhaps willing to offer more flex on inflation levels than some may have thought."

In equity news, shares in UK utility Pennon rose as its chief finance director Steve Buck was leaving the business.

Swiss chocolate maker Barry Callebaut fell sharply despite reporting slightly higher sales volumes during the nine months ended May, although a surge in cocoa prices hit demand.

Reporting by Frank Prenesti for Sharecast.com