March 7 Reuters European shares edged higher on Tuesday as a sharp jump in online fashion retailer Zalando offset weakness in luxury stocks on bleak China data, while markets awaited U.S. Federal Reserve Chair Jerome Powell39;s testimony.

The panEuropean STOXX 600 index inched 0.2 higher, reversing its declines from the opening bell as Europe39;s biggest online fashion retailer Zalando jumped 4.8.

The company provided a cautious outlook for 2023, but said it would continue to focus on improving profitability this year, including by cutting several hundred jobs across many of its teams as announced last month.

Europe39;s retail sector index led gains with a 0.8 rise, followed by defensive plays including healthcare, utilities and real estate.

Powell39;s testimony before Congress, set to begin at 1500 GMT 10 am EST, is keenly awaited for insights into the Fed39;s next move on interest rates.

The U.S. Fed and the European Central Bank are both set to hike interest rates in their policy meetings in the next couple of weeks, as markets and central banks grow increasingly anxious of stickierthanexpected inflation.

The ECB39;s chief economist Philip Lane said on Monday that the central bank is likely to increase rates further in the coming months to fight high inflation in the euro zone even if there are some signs that price pressures are easing.

Another report showed that Austrian central bank Chief Robert Holzmann, a known hawk, sees the need for 50basispoint hikes at…