Europe midday: Shares extend gains ahead of US CPI

European shares extended gains on Thursday as a dump of upbeat Christmas trading updates helped to boost sentiment while investors eyed US inflation data later in the day.

The pan-regional Stoxx 600 was up 0.75% at 1153 GMT, with all major regional markets higher after a positive session on Wall Street and mixed markets in Asia.

Economists are expecting a 6.5% year-on-year rise in US consumer prices in December, slipping from a 7.1% increase in November.

"This inflation print has been the main topic of conversation all week. The jobs report last Friday changed the dynamic in the markets and ensured that not only was this CPI report going to be important but in all likelihood pivotal ahead of next month's Fed meeting," said Oanda analyst Craig Erlam.

"We've gone from inflation declining but the labour market being stubbornly tight to both appearing to sing from the same hymn sheet. Cracks are appearing in the economy following a very aggressive tightening cycle that's leading to cooling demand, prices, and wage demands. Unemployment remains low as employers have been reluctant to lay people off but there's every chance that will follow."

"The Fed doesn't want to be responsible for a needlessly sharp downturn and the lag effect of monetary policy means that is a risk when the central bank is raising rates as aggressively as they have been. Another good inflation report today, particularly on the core side, will give policymakers more than enough reason to slow the pace of tightening further and even lower the terminal rate projections in March, if it continues."

In equity news shares in video game maker Ubisoft plunged as the company confirmed the cancellation of three unannounced games following disappointing quarterly results.

The French company also said its 'Mario + Rabbids: Sparks of Hope' and 'Just Dance 2023' games underperformed during the holiday season as people spend less time at home after Covid lockdowns and deal with the higher cost of goods.

Logitech International also fell sharply after posting lower earnings and sales between October and December and cutting its sales outlook.

British Gas owner Centrica gained as it lifted annual earnings guidance two months after a prior upgrade.

Shares in housebuilder Persimmon jumped as completions last year were near the top end of guidance, although the company warned that rising mortgage rates and cancellations had hit forward sales.

Dechra Pharmaceuticals was up on higher revenues in the first half, while Whitbread rose on as it posted a jump in third-quarter sales, highlighting a strong performance in the UK and further progress in Germany.

In the 13 weeks to 1 December, total sales rose 22.9% from the same period a year earlier, with sales in the UK and Germany up 19.2% and 158%, respectively.

Reporting by Frank Prenesti for Sharecast.com