European shares gain for third day as France inflation slows

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(Reuters) - European shares extended gains on Wednesday as a lower inflation reading from France boosted sentiment, while investors awaited euro zone business activity data and minutes from the U.S. Federal Reserve's last meeting.

The pan-European STOXX 600 rose 0.5% by 0808 GMT, while France's CAC 40 added 0.8%.

Preliminary data showed inflation in France slipped in December from a record high in the previous month, adding to a slew of encouraging data this week from improving euro zone manufacturing numbers to a slowdown in Germany's inflation.

The index has risen 2.7% so far in its first trading week of the year.

Focus is on December's euro zone business activity numbers due at 0900 GMT after data last month showed it declined for a fifth month in November, suggesting the block was sliding into a recession.

Investors also await minutes from the Fed's last meeting for cues on the central bank's monetary policy tightening path.

Sanofi (NASDAQ:SNY) edged up after the French healthcare company said it expected its fourth-quarter results, which will be published early next month, to reflect a boost from foreign exchange movements and flu vaccine sales.