European Stocks Close Lower As Hot U.S. Inflation Data Fuels Rate Hike Fears

(RTTNews) - European stocks closed lower on Wednesday, weighed down by concerns about more policy tightening by the Federal Reserve after data showed a faster than expected acceleration in U.S. inflation in the month of June.

Worries about rising coronavirus cases in China and looming fresh lockdowns in several places in the country also rendered the mood bearish.

Data from the U.S. Labor Department showed that the consumer price index shot up by 1.3% in June after jumping by 1% in May. Economists had expected consumer prices to leap by 1.1%.

With the bigger than expected monthly surge, the annual rate of consumer price growth accelerated to 9.1% in June, reflecting the biggest increase since November 1981. Economists had expected the annual rate of consumer price growth to accelerate to 8.8% in June from 8.6% in May.

The red-hot inflation data supported expectations for a more aggressive tightening path from the Fed in the coming months.

The pan European Stoxx 600 fell 1.01%. The U.K.'s FTSE 100 drifted down 0.74%, Germany's DAX declined 1.16% and France's CAC 40 ended 0.73% down, while Switzerland's SMI tumbled 1.49%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden and Turkey closed with sharp to moderate losses.

Greece and Iceland bucked the trend and ended higher.

In the UK market, ABRDN ended lower by 5% after Barclays downgraded the stock to "underweight".

Mondi, IAG, Smith (DS), GSK, Auto Trader Group, Ocado Group, Hikma Pharmaceuticals, Ashtead Group, Prudential and Rentokil lost 2 to 5%.

Antofagasta, Barclays, Natwest Group, Schrodders, Persimmon, Anglo American Plc, BT Group and AstraZenecal also ended sharply lower.

Fresnillo rallied nearly 4%. Endeavour Mining, Segro, Land Securities and Harbour Energy gained 1 to 2%.

In the French market, Faurecia ended nearly 4% down. WorldLine, BNP Paribas, Societe Generale, Renault, AXA, Credit Agricole, Carrefour, Danone, Bouygues, Saint Gobain, Air France-KLM, Publicis Groupe and Capgemini ended lower by 1 to 3%.

Vivendi climbed 1.6%, Pernod Ricard moved up 1.1% and Airbus Group gained about 0.8%.

In Germany, Daimler drifted down 4.6%. Zalando ended lower by about 4%. Fresenius, BMW, BASF, HeidelbergCement, Allianz, Fresenius Medical Care, Brenntag, SAP, Volkswagen, Deutsche Bank, Siemens and HelloFresh shed 1.4 to 2.8%.

In European economic news, data showed Eurozone industrial production rose 0.8% sequentially in May, well above expectation for a 0.2% increase.

Germany's consumer price inflation moderated in June from a record high in May, as initially estimated, latest figures from Destatis showed.

Consumer price inflation eased to 7.6% in June from 7.9% in May. That was in line with flash data published on June 29.

Similarly, the EU measure of inflation, or HICP, slowed to 8.2% from 8.7% in May. The latest figures match preliminary data.

French consumer price inflation accelerated to a new record high in June, as initially estimated, latest data from the statistical office Insee showed. EU harmonized inflation rose to 6.5% in June from 5.8% in May. That was in line with flash data published on June 30.

The latest inflation was the highest since records began in 1997.

Consumer price inflation accelerated to 5.8% in June from 5.2% a month ago, as estimated.

The UK economy recovered in May with more holiday bookings and visits to doctors, data published by the Office for National Statistics showed. Gross domestic product grew 0.5% from April, when output was down by revised 0.2%. Economists had forecast GDP to remain flat after April's initially estimated 0.3% fall.