Europe midday: Shares extend gains on UK inflation fall; Vistry surges

(Sharecast News) - European markets extended gains on Wednesday as investors waited on US inflation data and digested an unexpected fall in UK consumer prices. The pan-regional Stoxx 600 index was up 0.76% at 512 points with most major bourses up.

Official data showed UK inflation fell to a lower-than-expected 2.5% in December, against forecasts of an unchanged 2.6% compared with the previous month. Britain's FTSE 100 rose 0.78% on the news.

"Whilst at 2.5% inflation is still stubbornly above the Bank of England's target, the fact headline CPI has come in below expectation and has even fallen a bit is cause for a degree of celebration," said AJ Bell analyst Danni Hewson.

"Markets have immediately seized on the numbers which will be the last inflation snapshot monetary policy committee members will get before they make their decision on whether to deliver an interest rate cut in February."

Meanwhile, eurozone November industrial production rose slightly by 0.2% on a monthly basis, according to official data published on Wednesday.

On an annualised basis, industrial production decreased by 1.9% the euro area and by 1.7% in the EU.

The Germany economy shrank for the second year in a row in 2024, official data showed on Wednesday, weighed down by weakness across both manufacturing and construction.

According to first estimates from Destatis, Germany's Federal Statistical Office, GDP contracted by 0.2% year-on-year in 2024. That compares to a 0.3% decline in 2023.

Global bond prices were slightly lower, but remained elevated as investors worry about the potential inflationary effects of a US-inspired trade war days ahead of Donald Trump taking office.

In equity news, housing stocks were in focus as UK home builder Vistry said it expected full-year underlying revenue to rise around 9% to £4.4bn after three consecutive profit warnings.

Reporting by Frank Prenesti for Sharecast.com