Europe open: Stocks pull back after recent gains

European stocks pulled back on Wednesday as investors took a breather after two days of solid gains, treading cautiously ahead of inflation data and a European Central Bank meeting.

The Stoxx 600 was down 1.0% at 503.1, after closing above the 500-point mark for the first time in nearly two weeks on Tuesday.

The index had gained around 4.4% over the past two trading sessions alone amid increased optimism that Washington DC and Beijing could come to some sort of trade deal, after the Trump administration exempt certain Chinese-made consumer electronics from additional tariffs.

However, uncertainty still remains, with Trump calling on China to start trade talks, "signalling no immediate resolution to the tariff war", according to Patrick Munnelly, partner of market strategy at Tickmill Group.

"Global investors remain uneasy due to uncertainties in US trade policies and market volatility. Economic sentiment has hit a 30-year low, with fund managers' scepticism not yet fully reflected in asset allocations," Munnelly said.

London's FTSE 100 was outperforming the rest of Europe early on, falling by just 0.5%, after data showed that the annual rate of UK inflation eased more than expected in March, to 2.6% from 2.8% in February.

“A bigger than expected drop in headline inflation should be celebrated, especially considering what households have had to deal with over the past few years," said Danni Hewson, AJ Bell's head of financial analysis. “But this month’s figures almost seem redundant considering all those price rises that set in at the start of April, which are expected to push inflation higher than any of us would like."

At 1100 CEST, investors will be watching out for the eurozone's own consumer price index for March, while US retail sales and industrial production figures will be sure to make headlines in the afternoon session.

Looking ahead to Thursday, the European Central Bank is expected to cut interest rates again amid ongoing tariff-related uncertainty as downside risks to growth and inflation grow.

Market movers

UK-listed Bunzl dropped 26% after lowering its guidance for 2025 after a worse-than-expected start to the year, with profits down "significantly" in the first quarter due to a challenging economic backdrop.

Semiconductor-making equipment group ASML dropped sharply after publishing first-quarter orders below market forecasts as chipmaker spend was held back by tariff uncertainty.

London miners Antofagasta and Rio Tinto were both trading lower after issuing quarterly production updates. Antofagasta reported output improvements across all major commodity groups but warned of "significant volatility" in global markets, while Rio Tinto said that iron ore shipments would be at the lower end of guidance due extreme weather in the first quarter.