Europe open: Shares edge higher ahead of US, EZ inflation data

(Sharecast News) - European shares were cautiously higher at the open on Thursday as investors awaited inflation data from the eurozone and US. The pan-regional Stoxx 600 index was 0.05% higher in early deals with major bourses mixed. Germany's DAX outperformed with a 0.35% rise despite July retail sales data falling and missing estimates of a rise.

"Any signs of more stubborn inflation are still very much guiding market sentiment, so key data from the US and the eurozone will be pored over today," said Hargreaves Lansdown analyst Susannah Streeter.

"In the States the Fed's preferred measure - the US personal consumption data - is out later and the preliminary eurozone CPI data will also be closely watched given that a snapshot out yesterday showed inflation in Germany and Spain not cooling as fast as hoped.

"Inflationary pressures are still staying stubborn even though the downturn is intensifying especially in Germany. That's posing a big headache for the European Central Bank and if the eurozone wide inflation reading comes in hotter than expected, it is set to increase the chances of a rate hike in September, despite the risks of recession."

In Germany, retail sales fell by 0.8% month-to-month in July, missing forecasts of a 0.3% increase, according to official data released on Thursday.

On an annual basis, sales fell 2.2%, from a 1.6% decline in June, and below the consensus estimate of a 1.0% decrease.

Lower sales of clothing, shoes and hardware drove the decline, offsetting a rebound in food and online sales.

Meanwhile in China, factory activity contracted in August for the fifth month in a row. The official manufacturing purchasing managers' index rose to 49.7 from 49.3 in July, remaining below the 50.0 mark that separates contraction from expansion. Economists were expecting a reading of 49.2.

Meanwhile, the non-manufacturing PMI declined to 51.0 in August from 51.5 in July, versus consensus expectations of 51.2.

In equity news, Swiss banking giant UBS gained after delivering a record bottom line in its second quarter after booking a $29bn accounting gain from its takeover of Credit Suisse, but underlying profits still failed to meeting analysts' forecasts.

Building materials supplier Grafton was up as it reported a 29% fall in half-year profits amid a challenging market, but still lifted its dividend and announced a new £50m share buyback.

Pernod Ricard shares fell after the owner of Mumm champagne and Absolut vodka reported upbeat full-year results but warned of a softer first quarter in the US and China.

Reporting by Frank Prenesti for Sharecast.com