European shares were slightly lower at the opening on Tuesday as investors looked for direction, despite positive comments from the European Central Bank chief on rising inflation and a rally on Wall Street overnight.
The pan-European Stoxx 600 was down 0.27%, continuing recent losses sparked by a more hawkish tone from the US Federal Reserve over the pace of inflation rises and timing of possible interest rate rises.
However, investors took some comfort from remarks by ECB President Christine Lagarde, who on Monday said the euro zone and the US were “clearly in a different situation”.
“Well that didn’t last too long. After getting into a lather about the accelerated timetable for potential interest rate hikes announced by the US Federal Reserve last week, markets seem to have regained their poise,” said AJ Bell investment director Russ Mould.
“The catalyst seemed to be messaging from Fed officials which softened the hawkish tone of last Wednesday’s meeting, plus also a realisation that any rate increases are still two years away.”
Oil prices rose on supply concerns, with BP and Royal Dutch Shell shares rising as a result.
In equity news, shares in Irish building materials group Kingspan topped the Stoxx, up 5.73%, after reporting that first-half profit and sales are set to be ahead of the previous year and 2019 as the momentum reported in April has continued into the second quarter.
Melrose Industries gained after the turnaround specialist said its signs of recovery were in sight for its GKN aerospace division and it was also returning £730m in cash to shareholders from the sale of the Nortek business in April, with further payouts on the way.
DS Smith fell after reporting that the current financial year had started well as the packaging company posted a sharp drop in annual profit caused mainly by higher costs and lower prices during the early stages of the Covid-19 pandemic.
UK commercial property landlords British Land and Land Securities were also higher on recovery hopes as the former confirmed plans to start construction on a new tower block in east London.
Shares in consumer internet company Prosus fell despite posting strong operating profit and revenues.
