By Scott Kanowsky
Investing.com -- European shares held steady in early trading on Thursday, as traders look ahead to the release of crucial U.S. economic data and examine a new batch of corporate earnings.
At 03:40 ET (08:40 GMT), the pan-European STOXX 600 rose 0.60%, the DAX index in Germany traded 0.29% higher, the FTSE 100 in the U.K. gained 0.35%, and the CAC 40 in France increased by 0.71%.
Equities in the region received a strong handover from Asia, where stocks touched a fresh seven-month peak following the resumption of dealmaking in Hong Kong after a three-day holiday for Lunar New Year celebrations. The MSCI's broadest index of Asia-Pacific shares also rallied, adding on to a buoyant start to 2023 that has been fueled by hopes of a slowdown in U.S. Federal Reserve interest rate hikes and a recovery in the Chinese economy following the sudden relaxation of COVID-19 rules in the country.
Sentiment has been lifted as well by the Bank of Canada, which raised borrowing costs on Wednesday but said it will likely stay away from tightening monetary policy for the time being. Traders are now eyeing what that could mean for the Fed's future rate path.
"This all fits with the narrative of easing pricing pressures and a mild U.S. recession, which could actually see the Fed easing and a weaker dollar stimulating Rest of World growth," analysts at ING said in a note.
Attention will turn later in the day to the release of key preliminary fourth-quarter U.S. gross domestic product figures. Economists expect growth in the world's largest economy decelerated to 2.6% from 3.2% in the prior three-month period.
In Europe, a slew of major companies is reporting their latest results, with traders keen for any clues they may give about the outlook for the broader economy.
Shares in Diageo PLC (LON:DGE) slipped by more than 4% after the U.K.-based drinks maker's results pointed to a slowdown in operating profit in its North American unit.
Wizz Air Holdings PLC (LON:WIZZ) said it still expects to post a net loss in its 2023 earnings despite resilient travel demand, sending shares in the budget carrier lower.
Swedish truckmaker Volvo AB (ST:VOLVb) has posted lower-than-expected fourth-quarter income, as elevated input expenses and lingering supply chain disruptions partly offset a surge in net sales. Shares dipped by more than 3%.
But, at the other end of the spectrum, chipmaker STMicroelectronics NV (EPA:STM) jumped towards the top of the STOXX 600 after it reported better-than-anticipated fourth-quarter sales despite macroeconomic headwinds.
Elsewhere, hopes for a solid rebound in Chinese demand, as well as weakness in the dollar, were in focus in energy markets. By 03:40 ET, U.S. crude futures were 0.10% higher at $80.23 a barrel, while the Brent contract slipped by 0.09% to $86.04 per barrel.
Additionally, gold futures edged up 0.12% to $1,944.95/oz, while EUR/USD was largely unchanged at 1.0920.