By Sudeshna Ghoshal
Sept 23 (Reuters) - European shares inched higher on Wednesday as lower oil prices supported risk sentiment, while investors digested business activity data that showed euro zone growth accelerated unexpectedly this month.
The benchmark pan-European STOXX 600 was up 0.2% at 643.15 points by 0830 GMT. Most major regional bourses also traded higher.
Business activity across the euro zone accelerated this month at its fastest pace in more than three years, defying expectations for a slowdown,
although firms faced a sharper increase in operating costs, according to an S&P Global PMI survey.
The data comes days after a rally in oil prices revived inflation concerns and pushed bond yields to multi-decade highs. The European Central Bank also delivered its second interest rate hike this year.
"Broadly speaking, those data points are encouraging. What's going to be a key focus for the market, given that we've seen these rate hikes, is that they want to see that the activity in the economy is holding up," said Fiona Cincotta, senior market analyst at StoneX.
Banking shares led sectoral gains, up 0.5%, led by Raiffeisen Bank International and Kbc Ancora .
Technology shares were another bright spot, climbing to a four-week high and heading for a sixth consecutive session of gains, led by software stocks and strength in some semiconductor names.
OIL PRICES STAY BELOW $100
Retreating crude prices also supported risk sentiment, with investors watching to see whether the relief could prove short-lived.
"Until we really see the number of ships transiting straight to four weeks increase, there is a potential for debt buying in oil, which means that gains in stocks could be fragile," said Stonex's Cincotta, adding that "for now, the markets are taking it as a win."
Oil prices extended their declines for a sixth consecutive session as investors assessed the prospect of increased Gulf supplies after Saudi Arabia restarted operations at a key pipeline. Energy stocks, however, rose 0.2%. [O/R]
TRUMP-XI MEETING IN FOCUS
Traders are also await a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping, which would be closely watched for clues on trade relations and the global economic outlook.
There could be potential cooperation over AI too, with US Treasury Secretary Scott Bessent flagging talks on AI safety.
Among individual stocks, Arcadis emerged as the top decliner on STOXX index, down 7%, after Canadian engineering firm WSP Global dropped its takeover bid for the Dutch consultancy and engineering firm.
KWS shed roughly 8% after the German seed producer's annual net sales fell 3% to €1.63 billion ($1.86 billion), missing IBES estimate of €1.68 billion, hit by lower sugarbeet and corn acreage.
Shares of Adyen slipped 2.5% after the Dutch payments processor named Klarna's Niclas Neglen as its next chief financial officer, effective February 1, 2027.
(Reporting by Sudeshna Ghoshal in Bengaluru; Editing by Sherry Jacob-Phillips)
