Europe midday: Shares up as IDS spikes 20% on Kretinsky bid approach

(Sharecast News) - European shares extended their rally on Wednesday after a major sell-off a day earlier as investors digested UK inflation news and a rebuffed bid approach for Royal Mail owner International Distribution Services that sent the stock up 20%.

The pan-European Stoxx 600 index was up 0.69% and tipped over the 500 mark after a week of selling.

France's CAC 40 outperformed with a 1.33% rise to 8038, while Britain's FTSE 100 rebounded from the red to be 0.54% higher at 7862.24 despite weaker-than-expected inflation data.

UK inflation fell to its lowest in three and a half years last month, but eased less than expected, which is likely to prompt caution from the Bank of England to get price pressures in check before cutting interest rates.

The consumer price index rose at a year-on-year rate of 3.2% in March, down from 3.4% in February but ahead of the 3.0% expected by analysts.

The core rate of inflation, which excludes volatile items like energy, food, alcohol and tobacco, eased to 4.2% in March from 4.5% the month before - hitting its lowest level since December 2021.

"The disheartening inflation data this morning hasn't helped the FTSE into positive territory. While inflation is certainly moving in the right direction, it's still higher than the market expected, which will disappoint those expecting an earlier-than-forecast interest rate cut from the Bank of England," said Hargreaves Lansdown analyst Sophie Lund-Yates.

"Core inflation has also surprised to the downside, which will have added an extra layer of pressure to early trading."

In equity news, IDS spiked as Czech billionaire Daniel Kretinsky's EP group confirmed it had made a non-binding possible cash offer for the mail and parcel carrier on April 9 which had been rejected. EP owns around 27% of the company at the moment.

Shares in luxury giant LVMH were up after weak quarterly sales growth numbers release late Tuesday weren't as bad as feared. Sector peers Burberry and Christian Dior were also higher.

Continental shares fell after the German automotive supplier published first-quarter revenue and profit margin below expectations.

ASML fell as the largest supplier of equipment to computer chip makers reported weaker-than-expected new bookings in its first-quarter earnings on Wednesday.

Adidas shares rose as the sporting goods maker raised its 2024 profit outlook after a better-than-expected first quarter.

Reporting by Frank Prenesti for Sharecast.com