European shares made a cautious start to the week with small gains as investors digested UK GDP data.
The pan-European Stoxx 600 index was up 0.17% in early deals with all major regional bourses higher.
In Britain, official data showed the UK economy returned to growth in July, but this was weaker than expected as industrial production and construction shrank.
GDP rose 0.2% following a 0.6% decline in June, coming in below economists’ expectations of 0.5% growth. The services sector was the main driver of the rise in GDP, with growth of 0.4% in July, up from 0.5% the month before.
Meanwhile, production contracted by 0.3% following a 0.9% decline in June, mainly due to a fall of 3.4% in electricity, gas, steam, and air conditioning supply. Construction fell 0.8% in July following a 1.4% contraction the month before. This came solely from repair and maintenance, which fell 2.6%.
This marked the second consecutive contraction for production and construction.
The ONS said monthly GDP is now estimated to be 1.1% above its pre-Covid level in February 2020.
In equity news, shares in French care home company Orpea slumped by 20% after the debt-laden firm said its financial performance is expected to decline further in the second half of the year.
Orpea, which has come under fire over how it runs its homes and has various legal procedures pending in France, said operating profit margin on first-half earnings before interest, tax, depreciation, amortisation and restructuring or rent costs dropped to 18.5% from 24.9% a year earlier.
“In this context, and depending on the recovery of its occupancy rate, Orpea’s EBITDAR margin in the second half of 2022 could be lower than the level seen in the first half,” the company said in a statement.
Reporting by Frank Prenesti at Sharecast.com
