Europe open: Shares flat as traders eye Ukraine tensions, UK CPI hot print

(Sharecast News) - European shares were flat at the open on Wednesday after closing at a record high in the previous session as traders assessed disagreement between the US and Europe over how to end the war in Ukraine and a spike in UK inflation.

The pan-regional Stoxx 600 index barely moved the needle at 557.10 after closing at 557.96 on Tuesday. Most major bourses were in a similar position with the exception of Germany's DAX, which posted a 0.2% rise.

Eyes were on the spat following the meeting between US and Russian officials in Saudi Arabia on Tuesday to discuss a way to settle the war - at the exclusion of Ukraine itself and Europe.

US Secretary of State Marco Rubio and his Russia counterpart Sergei Lavrov agreed to create a working group to take "peace" talks forward and also look at deepening economic and diplomatic ties between their nations. Meanwhile, European nations are scrambling to formulate a unified response to support Ukraine's claim for a return of all territory seized during the conflict that started in 2022.

In economic news, inflation in the UK rose to 3% in January, above expectations of 2.8%. Core inflation, excluding energy, food, alcohol and tobacco prices, hit 3.7%, up from 3.2% in the previous month and the highest rate since April 2024.

"Despite this hotter-than-expected print, markets are still banking on two rate cuts from the Bank of England this year, with the odds of those cuts barely budging after today," said Hargreaves Lansdown analyst Matt Britzman.

"Policymakers where already expecting higher energy prices and a jump in airfares, and there wasn't anything unexpected to add into the mix, but the rise was sharper than hoped and adds to the risk that rate cuts come under pressure later in the year."

In another heavy day of corporate news, shares in Philips fell almost 7% after annual results.

Rheinmetall continued its run as the German arms maker benefited from talk of higher defence spending amid the Ukraine crisis.

Glencore was lower after the miner and commodities trader posted a fall in annual profits but still pledged to return $2bn to shareholders including a $1bn share buyback.

Reporting by Frank Prenesti for Sharecast.com