European shares rise with all eyes on German inflation data

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, Jan 2, 2023. REUTERS/Staff/File photo

European shares extended gains on Tuesday as investors awaited consumer prices data from Germany, the region’s largest economy, for clues about inflation in the euro zone.

The pan-regional STOXX 600 was up 0.5 percent at 0810 GMT, supported by financial and consumer discretionary stocks.

Investors were focussed on Germany’s CPI data, due at 1300 GMT, that could offer more cues on if cost pressures in the euro zone have weakened after the European Central Bank’s aggressive monetary policy tightening path.

German consumer prices, harmonized to compare with other European Union countries, are expected to have risen by 10.7 percent on the year in December in the preliminary reading, compared to an 11.3- percent increase in November.

French Prime Minister Elisabeth Borne said inflation was expected to peak at the start of 2023 before then retreating.

European stocks ended their first session of the year 1.6 percent higher on Monday after euro zone manufacturing data suggested the worst had passed as supply chains begin to recover and inflationary pressures ease.

UK’s FTSE 100, which has been closed since a shortened session on Friday, rose 1.1 percent in its first trading session of 2023.

Germany’s Brenntag gained 5 percent after the chemicals distributor disclosed it is ending talks with smaller U.S. rival Univar Solutions on a possible takeover.