European shares halted a three-day slide early on Wednesday, helped by a rise in retailers after a strong showing by British supermarket Sainsbury's and estimate beating German sales data.

Shares in Sainsbury's rose 4.2 per cent to the top of the pan-European FTSEurofirst 300 index, after the group reported a better-than-expected performance in the Christmas quarter. Peer Tesco, due to report on Thursday, was up 2.3 per cent.

Further supporting sentiment on European retailers, German retail sales rose one per cent in November, beating expectations for a flat reading, data from Germany's Federal Statistics office showed on Wednesday.

The FTSEurofirst 300 index of pan-European shares was up 0.3 per cent at 1,327.08 points at 0823 GMT, after shedding 3.3 per cent in the previous three sessions as the upcoming Greek elections unnerved investors and a slide in oil prices hit energy shares.

"The corporate news out there may help the market and the retailers, obviously, but there's enough negative news out there and I haven't seen anything that warrants a strong market," Mike Reuter, a trader at Tradition, said.

Euro zone inflation data

All eyes were on euro zone inflation data for December due at 1000 GMT, expected to show the first annual fall in consumer prices since 2009.

This was seen piling pressure on the European Central Bank to launch all-out quantitative easing at its next policy meeting on January 22.

"If you have a really negative number the market will take it positively because of QE," Tradition's Reuter said.

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