Europe midday: Shares hold gains as EZ CPI data boosts sentiment

(Sharecast News) - European shares held strong gains on Friday, as a sharp fall in eurozone inflation and strong UK GDP data offset an unexpected fall in German retail sales to lift sentiment. The pan-European Stoxx 600 was up 1.06% at midday with all major regional bourses higher.

The cost of living in the single currency bloc eased sharply in September, according to European Union statistics agency Eurostat, in seasonally adjusted terms the Eurozone Consumer Price Index rose by 0.3% month-on-month.

That was enough for the annual rate of increase to fall back from 5.2% for August to 4.3% in September. Economists had expected a year-on-year rate of 4.5%.

In the UK, GDP rose by 0.3% between January and March, up from the 0.1% growth previously estimated. This means that GDP is now estimated to be 1.8% above pre- pandemic 2019 levels.

GDP growth for 2022 as a whole was also revised up, to 4.3% from a first estimate of 4.1%, while second-quarter growth was unrevised at 0.2%.

"The UK economy has shown signs of life. GDP is now 1.8% ahead of pre-pandemic levels as the economy grew 0.2% in the second quarter from the first three months of the year. Crucially, GDP was up 0.6% from the same period the previous year, which was better than expected and has given the pound a shove in the right direction," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

In Germany, retail sales recorded an unexpected month-on-month 1.2% fall in August, well below forecasts of a 0.5% rise, official data released on Friday showed.

On an annualised basis retail sales fell by 2.3%. Food sales were down by 1.2% month-on-month, while non-food retail sales slid by 0.7% as online sales plunged by 8.7%.

"Consumers' spending, ex-services and cars, fell sharply in Germany midway through Q3 as it seems the boost to real incomes from falling inflation and rising wage growth is failing to lift consumption, at least to the extent we expected," said analysts at Pantheon Macroeconomics.

Meanwhile, separate data showed the jobless rate in Germany held steady in September but the number of people in unemployment rose less than expected.

The unemployment rate was unchanged at 5.7% this month, in line with analysts' forecasts, according to stats out Friday from the Federal Labour Office.

The number of unemployed people rose by just 10,000 to 2.642m in seasonally adjusted terms, down from the 20,000 added in August. This was below the 15,000 consensus forecast.

In equity news, specialist media firm Future surged by a fifth as it held annual earnings guidance despite volatile markets, but warned that trading conditions remain mixed.

JD Sports, Adidas and Puma gained after well-received first-quarter results from Nike.

Reporting by Frank Prenesti for Sharecast.com