European shares edge higher as traders await ECB decision

European shares ticked higher on Thursday, partly recovering from the previous session's steepest drop in two months, as traders waited for a widely expected interest rate increase from the European Central Bank. Business Recorder reported that the pan-European STOXX 600 gained 0.1% to 641.23 points at 0708 GMT, with Germany's DAX flat, London's FTSE up 0.1% and France's CAC 40 higher by 0.3%. Investors were also watching for remarks from ECB chief Christine Lagarde on oil prices and their effect on inflation.

European stocks had lost 1.4% in the previous session after Brent crude climbed above $100 per barrel, reviving inflation worries and suggesting central banks could need to keep policy restrictive for longer. Brent held above that mark on Thursday following a fresh escalation in which Iran and the US carried out their heaviest attacks on shipping since the conflict started six months ago. The ECB is set to lift its rate by 25 basis points later in the day, which opens a crowded stretch for central banks.

Among the company updates, Associated British Foods said it expects Primark's like-for-like sales to fall 3% in the fourth quarter ending September 12, and its shares dropped 8.6%. Central bank attention then shifts to the US Federal Reserve and the Bank of Japan, which will reveal their rate decisions next week.