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European shares were little changed on Wednesday as investors digested glum inflation data and its impact on the upcoming earnings season ahead of a key European Central Bank meeting on Thursday, while commodity-linked sectors gained on supply worries.

The pan-European STOXX 600 index was flat, with retail stocks and defensives such as real estate sliding between 0.2% and 0.6%, while oil and mining shares rose.

“When investors see high inflation figures, they look to put money into companies that thrive in an inflationary environment, such as miners,” said Danni Hewson, financial analyst at AJ Bell.

Crude prices extended gains after Moscow said peace talks with Ukraine had reached a dead end, feeding worries about tight supplies.

European stocks fall as healthcare and banking sectors suffer losses

A gauge of long-term euro zone inflation expectations rose above 2.40%, scaling a 10-year peak and far above the ECB’s 2% target, according to data from the central bank, which is due for a policy meeting on Thursday.

European stocks were lacking direction with the meeting likely to set the tone for the weeks to come, said Raffi Boyadjian, lead investment analyst at brokerage XM.

“The ECB will decide whether to provide a timeline on when interest rates will begin to rise amid soaring prices, but even if it adopts a somewhat more hawkish stance than anticipated, it will not be able to match the Fed’s rhetoric.”

While no major policy action is expected on Thursday, money markets are pricing in about 70 basis points of tightening by December. Investor worries over rising rates have roiled global markets in recent sessions.

The STOXX 600 has recovered from the sharp losses in March, but has been trading in a tight range ahead of the first-quarter earnings season.

Britain’s biggest retailer Tesco fell 2.0% after warning of a drop in profits this year due to surging inflation.

Wall Street bank JPMorgan Chase & Co’s first-quarter profit slumped 42% as dealmaking slowed and credit losses rose.

But analysts expect profit for STOXX 600 companies to rise 25.1% in the first quarter, as per Refinitiv data, up from 20.8% seen at the start of April and 15% at the start of the year.

EDF advanced 2.4% after a report stated France is considering restructuring plans for the debt-laden power firm that include full nationalisation followed by the sale of its renewables business.

Telecom Italia (TIM) gained 3.0% after reports French telecoms group Iliad was interested in making an offer TIM’s domestic consumer service business.

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