LVMH, Ahold keep European shares above water

On the other hand, growth is surprising to the upside." Shares of Barclays fell 8.4% to the bottom of the STOXX 600 index after the British bank reported a 14% fall in annual profit due to an administrative blunder that saw it oversell securities in the United States and lower deal fees.

European shares clawed higher on Wednesday as a boost from luxury group LVMH and Dutch supermarket group Ahold Delhaize more than offset losses in Barclays after the British lender posted lacklustre earnings.

The pan-European STOXX 600 index edged 0.1% higher, with a 1.6% jump in LVMH offering the biggest boost. The French group's top label Louis Vuitton said on Tuesday it has hired Pharrell Williams to head artistic direction of its menswear designs, with analysts optimistic about the decision.

Ahold Delhaize jumped 5.9% as the retail group reported stronger-than-expected quarterly core earnings, underpinned by its cost-saving strategy and strength in U.S. markets. The STOXX 600 has risen 8.8% so far this year, supported by a better-than-expected earnings season and hopes that the euro zone economy will narrowly avoid a recession.

UK's export-oriented FTSE 100 index recouped some of the early losses after the sterling dropped on data, which showed Britain's inflation eased more than expected in January. As U.S. stock markets grapple with mixed domestic inflation data feeding into worries of more rate hikes by the Federal Reserve, investors looked across the Atlantic for attractive investing opportunities given the slide in European equities last year.

"Love 'em or hate 'em, European stocks continue to enjoy a valuation advantage over the U.S.," said David Russell, vice-president of market intelligence at TradeStation. "On one hand they seem to be still under-owned following a decade of underperformance. On the other hand, growth is surprising to the upside."

Shares of Barclays fell 8.4% to the bottom of the STOXX 600 index after the British bank reported a 14% fall in annual profit due to an administrative blunder that saw it oversell securities in the United States and lower deal fees. European banks dropped 0.8%.

"For Barclays, it is the nearly 20% drop in annual net profit due to U.S. litigation (hitting shares). Even the dividend rise and 500-million-sterling share buyback couldn't improve the mood so far," said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank. Among other stocks, Heineken rose 2% as the world's second-largest brewer reported a higher-than-expected profit in 2022 due to growth in all markets and a sharp rebound in Asia.

Investors will be eyeing the U.S. retail sales data due later in the day.