Frankfurt (Reuters) - Amid a flood of company balance sheets, Europe's stock markets made cautious progress on Thursday.

The EuroStoxx50 gained 0.5 percent to 4326 points in the morning, while the Dax lagged behind, trading 0.1 percent higher at 15,915 points. The leading German index remains trapped in its tight price corset, with the psychologically important 16,000-point mark standing in its way like a bulwark, said market strategist Christian Henke from IG Markets.

The hoped-for boost from the US inflation figures had failed to materialize overall, said stock market analysts. The latest interest rate hikes by the US Federal Reserve seemed to be having a gradual effect, as shown by the surprising fall in the April rate. However, the fight against inflation remains a long road ahead. Meanwhile, the inflation trend in China fueled economic concerns. Despite the economic recovery, inflation in China has almost come to a standstill. Analyst Jürgen Molnar from broker RoboMarkets summarized the situation as follows: "If companies are unable to push through higher prices with their customers, this indicates both a declining propensity to consume at home and little demand from abroad. "The risk of recession for other economies cannot be overlooked."

The ongoing dispute over raising the US debt ceiling also weighed on sentiment. The threat of a financial collapse in the USA is a further risk for the already sluggish global economy and could also overshadow the meeting of finance ministers from the seven leading industrial nations (G7) in Japan, which investors are keeping a close eye on.

Meanwhile, the UK is still struggling with inflation above the ten percent mark. The Bank of England (BoE) is therefore likely to raise the prime rate further on Thursday. Experts surveyed by Reuters expect an increase of a quarter of a percentage point to 4.50 percent. The British pound moved away from its multi-month highs in the run-up to the hike and fell by 0.3 percent to 1.2585 dollars. Investors are focusing on the forward-looking comments from central bank chief Andrew Bailey. At the moment, the markets are pricing in two further increases of a quarter of a percentage point each. If the central bank dampens these expectations, this could weigh on the pound exchange rate, said currency strategist Carol Kong from the Commonwealth Bank of Australia.

BAYER AND SUSE SLUMP - MERCK AND ING HIGHER

Investors also had a flood of company balance sheets to digest. Bayer was punished after a weak start to the year. The shares slumped by up to 7.9 percent to 53.70 euros, their lowest level for four months. After a significant drop in earnings in the first quarter, the pharmaceutical and agricultural group only sees the lower end of its annual targets within reach.

After lowering its forecast, Suse shares plummeted by a good 23 percent and headed for the biggest one-day loss in the company's history. The Linux specialist missed expectations for the fourth time in six quarters, commented analyst Charles Brennan from investment bank Jefferies. The lowered targets put a question mark over the company's strategy.

However, solid growth at the beginning of the year and a more optimistic outlook from Deutsche Telekom were well received by investors. The shares rose by up to 1.9 percent. Despite losses in the liquid crystals and semiconductor chemicals business, investors also bought Merck shares, which rose by up to 2.8 percent to 165.70 euros. Analysts at investment bank Jefferies pointed to the smaller than feared decline in adjusted operating profit. ING was also able to score points with investors. The major Dutch bank wants to buy back its own shares after a jump in profits in the first quarter. The shares rose by 3.8 percent.

(Report by Anika Ross, edited by Hans Seidenstücker. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)