By Pranav Kashyap
(Reuters) -European shares were largely steady on Tuesday ahead of key inflation data for the region later in the day.
The pan-European STOXX 600 was up 0.1% at 523.42 after it logged its worst day in over a week on Monday.
Tech stocks rose 1%, but were offset by losses of nearly 1% in luxury firms.
European luxury firms rallied last week, propelling the STOXX 600 to new highs on the back of Chinese stimulus measures.
“It’s standard to see a pausing in a bullish run, given the strength of the gains that we saw last week,” said Fiona Cincotta, senior market analyst at City Index.
Energy stocks lost 0.9%, dragged down by a 5.8% decline in biofuels maker Neste Oyj.
Investors are now looking ahead to the Eurozone’s flash inflation figures for September, due at 0900 GMT, which could decide whether the European Central Bank (ECB) lowers interest rates at its next meeting in two weeks.
ECB President Christine Lagarde said on Monday that the central bank is increasingly confident that inflation will drop to its 2% target.
Additionally, markets will be monitoring speeches from ECB Vice President Luis de Guindos, policymaker Olli Rehn, and board member Isabel Schnabel, who are set to speak at various events throughout the day, for further clues on rate cuts.
Meanwhile, manufacturing activity across the euro zone declined at its fastest pace this year in September, while the German manufacturing sector also contracted at its fastest rate in a year, PMI data showed.
France’s manufacturing sector continued to contract in September, while Italy’s manufacturing activity contracted for a sixth straight month in September.
Among individual stocks, Covestro jumped 3.8% after Abu Dhabi National Oil Company (ADNOC) said it has agreed to buy the German chemicals producer for 14.7 billion euros ($16.4 billion).
Anheuser-Busch InBev gained 2.3% after Citigroup upgraded the Budweiser brewer’s stock to “buy” from “neutral”.
Across the pond, Federal Reserve Chair Powell indicated overnight that the central bank would likely stick to 25 basis-point (bp) cuts henceforth after new data boosted confidence in economic growth and consumer spending.
“Markets building hopes of another 50 bp rate cut was overdone and we’ve seeing that optimism dialled back,” City Index’s Cincotta said.