European shares tick higher on bank, auto boost

European shares opened modestly higher on Wednesday, led by gains in banking and auto stocks, but sentiment was kept in check as a clutch of bleak data stoked fears of slowing growth.

Starting June on a positive note, the pan-European STOXX 600 index rose 0.3% by 0716 GMT after closing down 0.7% on Tuesday, as record high inflation had stoked worries about aggressive central bank action. It lost 1.6% in May.

Deutsche Bank economists now expect the European Central Bank to raise interest rates by 50 basis points in September as rising prices squeeze economic growth.

Data showed German retail sales fell by more than expected in April as consumers feel the pinch of higher prices, while another survey showed British companies expect barely any growth over the next three months.

Auto stocks rose almost 1%, while banks were the biggest boost to the STOXX 600, up 0.6%.

Among individual stocks, British footwear brand Dr. Martens surged 19.0% after it forecast higher annual revenue growth, thanks to price hikes made in response to soaring inflation and stronger sales of its shoes and boots.

Deutsche Bank's asset manager DWS slumped 6.9% after its chief executive officer said he would step down next week, as the company faced allegations of misleading investors about "green" investments.