Utilities, telecoms support European stocks as carmakers slide

European stocks inched higher on Tuesday, lifted by utilities and telecom shares, although weak German industrial output data and doubts over the United Kingdom lifting restrictions later this month capped gains.

The pan-European Stoxx 600 index rose 0.2 per cent by 0713 GMT - holding below all-time highs - with sectors considered more stable such as utilities, real estate and telecoms leading the gains.

Data showed German industrial output fell unexpectedly in April, in a further sign that semiconductor shortages and other supply bottlenecks are hampering the recovery in Europe’s largest economy.

Automakers slid 0.8 per cent after a six-day rally that took the index close to its record peak.

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Swiss contract drugmaker Lonza gained 3.6 per cent after Goldman Sachs upgraded the stock to "buy".

British shares rose, with the blue-chip Ftse 100 index up 0.2 per cent. Intermediate Capital Group climbed 6.9 per cent to a record high, after the alternative asset manager posted a 19 per cent jump in its annual third-party assets under management. British American Tobacco gained 2.3 per cent, after it raised its annual revenue growth forecast to more than 5 per cent at constant currency as the cigarette maker's focus on newer products like e-cigarettes and tobacco-heating devices pays off. The domestically focused mid-cap Ftse 250 index advanced 0.1 per cent.

Asian stocks pared early gains, with traders staying on the sidelines ahead of U.S. inflation data and a European monetary policy meeting this week for gauging market trajectory.

"Investors' main concern appears to be over short-term inflation risk and whether rising prices are likely to be transitory in nature," said Michael Hewson, chief market analyst at CMC Markets UK.

Adding to investors’ concerns, a report said Britain’s proposed June 21st lifting of lockdowns could be delayed by a fortnight as Covid-19 cases continue to mount.

"The all-important question will be how this translates into hospitalisations and deaths now that 53 per cent of the adult population are fully vaccinated," Deutsche Bank strategist Jim Reid wrote in a note.

After breaking above the 7,000 mark in mid-April, the Ftse 100 has traded in a tight range as concerns over accelerating inflation overshadowed optimism about a gradual reopening of the economy.

Among other stocks, Paragon Banking Group jumped 6.8 per cent after the lender posted a record first-half underlying profit and set out a £40 million buyback plan. Aviva gained 3 per cent after activist investor Cevian Capital took a 4.95% per cent stake in the British insurer. – Reuters