LONDON (ShareCast) - Europe’s main markets are still mixed midday with telecom and energy stocks doing well, while financials are back among the top fallers.

In economic news, euro zone inflation rose to a record of 4% year-on-year in June, adding to pressure on the European Central Bank to increase rates later this week.

The inflation rate compares to 3.7% in May and is the highest in over 16 years, European Union statistics office Eurostat said Monday.

Analysts expect the ECB to hike its main lending rate by a quarter point to 4.25% on Thursday. Last month, ECB president Jean-Claude Trichet said the bank could raise rate "by a small amount" in July.

France Telecom rallied in Paris after it dropped plans to buy Nordic rival TeliaSonera, saying it was “unable to reach agreement’ on the price. TeliaSonera was sharply lower.

Alcatel-Lucent advanced after Merrill Lynch upped its stance on the shares to 'neutral' from 'underperform' on valuation grounds.

High crude oil prices near $143 a barrel boosted some energy stocks. Total and Eni were going well.

Fuel-guzzling airline stocks, however, were sharply lower. Lufthansa, Air Berlin and Air France-KLM dropped. Carmakers joined the slide, with Bayerische Motoren Werke and Daimler in the red.

Crude for August delivery reached a best ever $142.99 on Friday after a prediction from OPEC’s president that prices could hit $170 this summer.

Financials were lower again. BNP Paribas fell after HSBC cut its stance on the French banking group to 'neutral' from 'overweight'.

The German Dax is 52 lower points at 6,369, the French CAC is 5 points better at 4,402, while the Swiss market gained 43 points to 6,904.

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