Europe open: Shares inch higher as Covid restrictions still worry

European shares crawled higher at the opening on Tuesday, with investor sentiment held back by worried over tighter coronavirus travel restrictions and rising UK unemployment.

The pan-European STOXX 600 index rose 0.4% after closing lower on Monday. The UK FTSE rose despite official data showing British redundancies at a record high, with the unemployment rate hitting 5% for the first time since mid-2016.

"Yet that rise in the unemployment rate still leaves it short of the 5.1% forecast. The average earnings index surged past estimates, at 3.6% against the 2.9% estimated. And, in the most recent piece of data, December’s claimant count change reading came in at just 7k, a fraction of both the 38.1k seen the month prior, and the 47.5k analysts had expected," said Spreadex analyst Connor Campbell.

"Concerns over the length of the UK’s current lockdown remain an underlying issue for the index, especially since the Conservative party seem to have shifted their strategy away from the make-and-then-break promises policy of 2020."

The UK government was expected on Monday to announce a mandatory 14 day quarantine for all arriving passengers.

Italy’s FTSE MIB was up 0.49% with Prime Minister Giuseppe Conte set to resign later on Tuesday on hopes President Sergio Mattarella will give him a mandate to form a new government with broader backing in parliament.

In equity news, shares in Spanish energy company Naturgy Energy Group soared after it revealed a Global InfraCo planned a cash offer for a 22.69% stake. Global InfraCo will offer 23 euros a share, for a maximum €5.06bn.

Shares in wealth manager UBS gained as high levels of client activity helped it record a 137% rise in net profit.

Swedish buyout group EQT jumping 9.7% after it signed a deal to buy global real estate investment manager Exeter Property Group for $1.87 billion.

Aircraft engine maker Rolls-Royce plunged almost 10% as the company revised down its 2021 outlook for engine flying hours as Covid travel restrictions and new strains of the virus continue to batter the travel industry.