Sharecast - The FTSE 100 was called to open six points higher at 7,479.
CMC Markets analyst Michael Hewson said: "As we look towards today’s European session, the focus today returns to inflation, and more importantly whether there is enough evidence to justify a pause in September from both the ECB as well as the Federal Reserve, as we get key flash inflation numbers from France, Italy, and the EU, as well as the latest core PCE inflation numbers for July from the US.
"Over the course of the last few weeks there has been increasing evidence that the eurozone economy has been slowing sharply, with the recent flash PMIs showing sharp contractions in both manufacturing and the services sector. Other business surveys have also pointed to weakening economic activity although prices have also been slowing, taking some of the pressure off the ECB to continue to hike aggressively."
As for the US, Hewson said that today’s July inflation numbers could prompt further concern about sticky inflation if there is a sizeable tick higher in the monthly, as well as annual headline numbers, reversing some of the decline in bond yields seen so far this week.
Investors will also be mulling the latest data out of China. The official manufacturing purchasing managers index for August rose to 49.7 from 49.3 in July, coming in above consensus expectations of 49.2.
Meanwhile, the official non-manufacturing PMI declined to 51.0 from 51.5, versus expectations of 51.2.
In UK corporate news, building materials supplier Grafton reported a 29% fall in half-year profits amid a challenging market, but still lifted its dividend and announced a new £50m share buyback.
Pre-tax profits came in at £93.6m for the six months to June 30, compared with £132m a year earlier. The dividend was lifted 8.1% to 10p a share.
Grafton said it expected full year adjusted operating profit of around £202.6m and a range of £194.6m - £209.4m, in line with its own compiled forecasts of analysts.
"Whilst market conditions are expected to remain challenging over the remainder of the year amid a backdrop of high inflation, high interest rates and cost of living pressures, our management teams lead our businesses with a through-the-cycle mindset and we are confident in the medium to long term strength of the group's brands and market positions to deliver superior returns," the company said.
Belfast-based IT services group Kainos (LON:KNOS) announced that full-year results are still expected to meet consensus forecasts despite an "uncertain" trading environment.
In a brief trading update for the first half ending 30 September, the company said customers have maintained their investments in digital projects and trading during the period was "good".
Current consensus forecasts are for full-year revenues to be between £418m-434m, up from £375m the previous year, and adjusted pre-tax profit in the range of £73m-78m, up from £68m.