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(Sharecast News) - European shares opened higher as investors mulled an unexpected fall in Chinese factory activity and awaited a flash print of eurozone inflation data along with any developments in the US-China trade war.
The pan-regional Stoxx 600 index was up 0.19% to 548.82 points in early deals. Germany's DAX gained 0.27% and France's CAC 40 rose 0.15%.
Activity in China's manufacturing sector unexpectedly contracted in May, according to data released on Tuesday.
The Caixin/S&P Global manufacturing purchasing managers' index, which focuses on smaller companies, fell to 48.3 from 50.4 in April, missing expectations for a reading of 50.7. It marked the lowest level since September 2022.
A reading above 50.0 indicates growth, while a reading below signals contraction.
On the economics front, a preliminary estimate of eurozone inflation for May is expected to show a cooling towards the European Central Bank's 2% target after April's hot reading of 2.2%. A fall would help the central bank's case for a 25 basis point cut in rates when it meets on Thursday.
Meanwhile eyes are still on US tariffs after President Donald Trump on Friday said he would double tariffs on steel imports from to 50% on June 4.
"June started on a bearish note, as renewed trade tensions and mixed economic data dominated the headlines. First, tensions between the US and China notched up another level, with both countries accusing each other of violating agreements and implementing discriminatory measures. It's now uncertain whether Trump and (China President) Xi will meet to talk," said Swissquote Bank analyst Ipek Ozkardeskaya.
"Then, not much progress has been made on the European front - aside from growing frustration in Brussels after the US doubled steel and aluminium tariffs to 50%, effective mid-June."
"Meanwhile, tensions between the EU and China are also rising, with the EU deciding not to purchase medical equipment from China, citing 'reciprocity of purchasing'. If Europeans start playing by Trump's rules, the next four years could turn into a global nightmare. At least everyone will get a slice of the horror pie-apparently, that's what global politicians are aiming for."
In equity news, Julius Baer fell as the Swiss bank said it planned to cut costs by 130 million Swiss Francs by 2028 as part of its strategic review.
Reporting by Frank Prenesti for Sharecast.com