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STOXX 600 up 0.1%

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Covestro ( CVVTF ) jumps on $16.4 billion buyout deal

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Eurozone flash inflation data due 0900 GMT

(Updated at 0815 GMT)

By Pranav Kashyap

Oct 1 (Reuters) - European shares were largely steady on

Tuesday ahead of key inflation data for the region later in the

day.

The pan-European STOXX 600 was up 0.1% at 523.42

after it logged its worst day in over a week on Monday.

Tech stocks rose 1%, but were offset by losses of

nearly 1% in luxury firms.

European luxury firms rallied last week, propelling the

STOXX 600 to new highs on the back of Chinese stimulus measures.

"It's standard to see a pausing in a bullish run, given the

strength of the gains that we saw last week," said Fiona

Cincotta, senior market analyst at City Index.

Energy stocks lost 0.9%, dragged down by a 5.8%

decline in biofuels maker Neste Oyj ( NTOIF ).

Investors are now looking ahead to the Eurozone's flash

inflation figures for September, due at 0900 GMT, which could

decide whether the European Central Bank (ECB) lowers interest

rates at its next meeting in two weeks.

ECB President Christine Lagarde said on Monday that the

central bank is increasingly confident that inflation will drop

to its 2% target.

Additionally, markets will be monitoring speeches from ECB

Vice President Luis de Guindos, policymaker Olli Rehn, and board

member Isabel Schnabel, who are set to speak at various events

throughout the day, for further clues on rate cuts.

Meanwhile, manufacturing activity across the euro zone

declined at its fastest pace this year in September, while the

German manufacturing sector also contracted at its fastest rate

in a year, PMI data showed.

France's manufacturing sector continued to contract in

September, while Italy's manufacturing activity contracted for a

sixth straight month in September.

Among individual stocks, Covestro ( CVVTF ) jumped 3.8%

after Abu Dhabi National Oil Company (ADNOC) said it has agreed

to buy the German chemicals producer for 14.7 billion euros

($16.4 billion).

Anheuser-Busch InBev gained 2.3% after Citigroup

upgraded the Budweiser brewer's stock to "buy" from "neutral".

Across the pond, Federal Reserve Chair Powell indicated

overnight that the central bank would likely stick to 25

basis-point (bp) cuts henceforth after new data boosted

confidence in economic growth and consumer spending.

"Markets building hopes of another 50 bp rate cut was

overdone and we've seeing that optimism dialled back," City

Index's Cincotta said.