By Nathan Allen
Global stocks posted gentle gains on Wednesday despite disappointing sales data from U.S. retailers on Tuesday and as trade tensions between the U.S. and China continued to overhang market activity.
The Stoxx Europe 600 was up 0.2% in morning trade, with the U.K's FTSE 100 up 0.6% and Germany's DAX up 0.4%.
In Asia, Hong Kong's Hang Seng and Korea's Kospi both gained 0.2%, Japan's Nikkei edged up 0.1% and China's Shanghai Stock Exchange dropped 0.5%.
London-listed retailer Marks & Spencer Group was the biggest loser on the FTSE 100, falling 5% after posting a sharp drop in annual pretax profit and launching a heavily discounted rights issue to finance its joint venture with Ocado Group. It was the latest disappointment from the retail sector, after U.S. retailers reported slower sales during the most recent quarter as they brace for higher tariffs on Chinese imports.
On Wall Street, futures pointed to flat opens for both the S&P 500 and the Dow Jones Industrial Average. U.S. indexes closed higher Tuesday, lifted by technology stocks after the White House granted temporary exemptions to an export blacklist against Huawei Technologies.
U.K. core inflation accelerated to a 2.1% annual rate in April, moving ahead of the Bank of England's 2% target, putting pressure on the central bank to nudge up interest rates.
Analysts at ING said the BOE is likely to keep rates on hold for now, as the overall economic picture still looks fairly benign, though they didn't rule out the possibility of some tightening in November.
Meanwhile, U.K. Prime Minister Theresa May made a fourth push to gain parliamentary support for her Brexit deal on Tuesday, proposing several concessions, including a second referendum on Britain leaving the EU.
The British pound rallied immediately after her comments but quickly returned to lower levels. Before her address, the currency had hit a four-month low against the dollar as fears of a so-called hard Brexit returned.
Traders have been struggling to gauge the underlying direction of markets, which have become increasingly volatile as tensions between the U.S. and China have flared up in recent weeks.
"The longer the paralysis lasts the more extreme the swings are going to be," Philippe Gijsels, chief strategy officer at BNP Paribas Fortis said.
Investors will be watching for any policy signals from European Central Bank President Mario Draghi, who is scheduled to speak in Frankfurt this morning. U.K. inflation numbers are also due later in the day.
The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was flat.
The yield on 10-year U.S. Treasurys edged down to 2.425% from 2.428% on Tuesday. Yields move inversely to prices. German 10-year government bonds were in negative territory at -0.065%.
In commodities, global benchmark Brent crude oil was down 0.9% at $71.55 a barrel.