Europe open: Direct Line hammered on dividend axe; Bayer gains on breakup call
European shares edged ahead at the open on Wednesday after Asia made gains with sentiment tempered by upcoming US inflation data on Thursday.
The Stoxx 600 index was up 0.11% at 0828 GMT with all major European bourses higher. US futures indicated small losses at the open on Wall Street after Federal Reserve Chair Jerome Powell avoided commentary on monetary policy in a speech on Tuesday.
He told an audience at Sweden’s central bank of the need for the Fed to be free of political influence while it tackles persistently high inflation after raising rates seven times in 2022.
Powell added that stabilising prices meant making tough and politically unpopular decisions.
Stocks were held back by large falls in the insurance sector after UK-based Direct Line said it was axing its final dividend after a surge in claims following a severe weather in Britain in December, which pushed the motor and home insurer to an underwriting loss for the year.
The shares plunged almost a third on the news, with the fallout hammering rival Admiral Group, which fell 15%. Others to suffer included Aviva, Hiscox and Legal & General.
In other equity news, shares in UK supermarket group Sainsbury fell despite a jump in sales over the Christmas period. Housebuilder Barratt was also lower as it warned of a slowdown in the domestic housing market.
On the upside, shares in JD Sports Fashion gained as the company said it expected profits to beat expectations after Christmas sales rose by a fifth.
Bayer shares gained after Bloomberg reported that activist investor Bluebell is pushing for a breakup of the German pharmaceutical company. The report follows news earlier this week that another activist investor, Inclusive Capital, had bought a stake in the company.
Reporting by Frank Prenesti for Sharecast.com