European Shares Rebound Amid Fed Rate Cut Bets

European shares opened higher on Wednesday, buoyed by a soft U.S. labor market report that increased expectations of a Federal Reserve rate cut. The pan-European STOXX 600 gained nearly 0.5%, recovering from previous losses, with a strong performance by the retail sector led by Inditex. Investor attention remains on the ECB's interest rate decision.

European shares opened higher on Wednesday, mirroring global sentiment as a soft U.S. labour market data firmed bets of a rate cut from the Federal Reserve, ahead of the European Central Bank's key rate verdict later this week.

The pan-European STOXX 600 was up nearly 0.5% as of 0723 GMT, rebounding from losses made in the previous session. Wall Street ended higher on Tuesday and Asian equities broadly rose on Wednesday after data showed U.S. job openings fell in April, signalling an easing labour market and firming bets of a Fed rate cut.

Investor focus, however, remained on the ECB's key interest rate decision on Thursday, where it is expected to ease borrowing costs by 25 basis points from the present record levels of 4%. All major European sectoral indexes traded higher, led by a 1.7% advance in the retail sector as Zara-owner Inditex jumped 4.7% on better-than-expected current trading numbers in its first-quarter results.

Spain's benchmark IBEX index outperformed the region's bourses, up 0.76%. Markets will now await the May PMI data for the euro zone due later in the day.