European shares little changed, inflation data in focus By Reuters

By Khushi Singh

(Reuters) -European stocks were subdued on Monday, with several major markets closed and investors taking a cautious stance ahead of key inflation data from the United States and Europe later this week.

The pan-European index was up 0.1% at 0804 GMT. With the U.S. and UK markets closed on Monday, trading activity was light across the board.

Investors are awaiting May consumer prices data for the euro zone later this week to gauge the European Central Bank’s (ECB) path for interest rates ahead of a policy meeting next week.

The central bank looks set to start easing interest rates in the upcoming meeting with a 90% probability and softer inflation data could help seal the June rate cut. [0#ECBWATCH]

Energy prices have been contained and there is not much reason for the European inflation to show an unexpectedly upward print, said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

“If inflation is as expected, this week’s data will most probably alter the expectations beyond June (rather) than the June meeting (itself),” Ozkardeskaya added.

A survey showed German business morale stagnated in May, falling short of a forecast for improvement. “The German economy is gradually working its way out of the crisis,” the report said.

The benchmark German index was up 0.12%.

Meanwhile, ECB chief economist Philip Lane told the Financial Times the monetary policy must continue to be restrictive this year as wage growth will not normalise until 2026.

U.S. inflation data, also due on Friday, could help traders assess the timing and numbers of possible rate cuts by the Federal Reserve this year.

The oil and gas index added 0.5% as crude prices ticked higher, while the utilities added 0.7%, leading sectoral gains.

In corporate news, shares of salmon producer P/F Bakkafrost led declines on the STOXX 600 index, with a 3.1% slip after the ISA virus was found in two pens at farming site A-19 Vágur.