Europe midday: Shares hold gains on German GDP data

European shares remained higher at lunchtime on Wednesday as stronger-than-expected German economic growth drove gains, investor sentiment was still tempered by inflationary fears.

The pan-European Stoxx 600 index was up 0.24%, with Germany’s DAX outperforming and up 0.7%.

Strong exports and solid construction activity helped the German economy to grow by 0.3% in the final quarter of last year, the Federal Statistics Office said as it revised up an earlier estimate.

London’s FTSE 100 underperformed, but pared losses from the morning to be was down 0.04% as as sterling rallied. A stronger pound tends to dent the top-flight index as around 70% of its constituents derive most of their earnings from overseas.

Spreadex analyst Connor Campbell said: "While it failed to react much to the announcement at the start of the week, the idea that the UK could be back to ‘normal’ by the summer seems to have finally sunk in for sterling.

In equity news, Lloyds rose as it reported a 72% slump in annual profits, reflecting the impact of the Covid-19 pandemic, but reinstated dividend payments.

Shares in Telecom Italia were up 9% as the company said net profit rose despite falling revenue in the fourth quarter, partly thanks to a new tax regime, and confirmed its dividend for the year and medium-term guidance.

Travel & leisure stocks were on the rise again amid the prospect of easing restrictions, with British Airways owner IAG, TUI, Carnival and easyJet all higher.

AstraZeneca shares fell after the pharma giant told the European Union that it expects to deliver less than half the Covid-19 vaccines it was contracted to supply in the second quarter.

German sportswear company Puma dropped nearly 2.89% after the company said it expected a heavy impact on its results from Covid-19 pandemic lockdowns to the end of the second quarter.

Consumer goods giant Reckitt Benckiser gained after the company posted a surge in full-year revenues as demand for cleaning and hygiene products spiked during the pandemic.

Housebuilders Barratt, Taylor Wimpey and Persimmon were all up amid reports the stamp duty holiday will be extended until the end of June.