Europe open: Shares edge higher after US, UK inflation data

(Sharecast News) - European markets edged ahead at the open on Wednesday as investors analysed inflation data from the US and UK. The pan-European Stoxx 600 index was up 0.11% at 483.35 in early deals. Shares fell in the US overnight as inflation rose by more than expected in January, with the headline consumer price index up 0.3% month on month and 3.1% annually, higher than forecasts of 0.2% and 2.9% respectively.

In the UK inflation was unchanged at 4% year-on-year in January, better than expected given a rise in energy prices, although food and non-alcoholic beverage prices eased.

Investors are also looking ahead to fourth-quarter gross domestic product numbers on Thursday that could show Britain has entered a technical recession.

''Inflation is still acting like an awkward teenager, staying stubborn despite attempts to calm it down, although the moodiness isn't as bad as expected," said Hargreaves Lansdown analyst Susannah Streeter.

"Disinflationary forces are at work in the economy, which should see further drops in the months to come with the target of 2% within reach this spring."

"The uplift in services inflation from 6.4% to 6.5% will continue to be a nagging worry though for Bank of England policymakers. They've already flagged concerns about pay growth which is slowing but inflation busting pay rises are still the norm."

However, the data fuelled hopes of interest rate cuts, with economists now expecting one in May. UK housebuilders Taylor Wimpey and Persimmon made gains on the prospect of lower borrowing costs.

In other equity news, ABN Amro shares were at the top of the Stoxx after the Dutch bank beat fourth-quarter profit expectations on the back of high interest and credit impairment releases.

Coca-Cola HBC gained after it posted record profits last year driven by surging sales and volumes for sparkling drinks and coffee combined with costs easing in the second half.

Reporting by Frank Prenesti for Sharecast.com