European shares hold steady ahead of US inflation data

European shares were subdued on Wednesday ahead of a crucial inflation report out of the U.S., while investors assessed the impact of a potential U.S.-China agreement on the trade war.

The pan-European STOXX 600 was up 0.1% at 553.85 points at 0705 GMT.

Late on Tuesday, U.S. and Chinese officials said they had agreed on a framework to put their trade truce back on track and remove China's export restrictions on rare earths, and remove some from the U.S.

The agreement will be taken back to the leaders of the two countries for approval.

In Europe, carmakers that would benefit from the removal of rare earth curbs were among the biggest gainers, up 0.5%.

Retailers were at the bottom of the index with a 2.4% decline. Zara owner Inditex missed expectations for first-quarter sales, falling 4%.

A May reading of U.S. inflation data, set for release later in the day, also made investors nervous as they waited to see if the impact of U.S. tariffs had seeped into the economy.

In the UK, Finance Minister Rachel Reeves was set to divide up more than 2 trillion pounds ($2.7 trillion) of public spending aimed at stimulating the British economy.

(Reporting by Purvi Agarwal in Bengaluru; Editing by Janane Venkatraman)