European Stocks Close Broadly Lower On Inflation Worries

(RTTNews) - European stocks closed lower on Wednesday after data showing an increase in inflation in Germany and Spain raised concerns the European Central Bank will continue with policy tightening.

Data showing a notable slowdown in the pace of private sector job growth in the U.S., and a less than expected increase in U.S. GDP in the second quarter, added to optimism about the outlook for Fed interest rates, and helped limit losses in European markets.

The pan European Stoxx 600 ended 0.15% down. Germany's DAX drifted down 0.24% and France's CAC 40 shed 0.12%, while the U.K.'s FTSE 100 edged up 0.12%. Switzerland's SMI lost 0.14%.

Among other markets in Europe, Belgium, Denmark, Greece, Portugal, Spain, Sweden and Turkiye closed weak.

Austria, Finland, Ireland, Norway and Poland ended higher, while Iceland, Netherlands and Russia closed flat.

In the UK market, Kingfisher ended 2.37% down. BT Group shed about 1.6%, while Hiscox, SSE, JD Sports Fashion, IAG and Antofagasta ended lower by 1 to 1.3%.

Prudential gained about 2% after reporting a 6% increase in first-half operating profit.

Persimmon, Fresnillo, Taylor Wimpey, Rolls-Royce Holdings, Barratt Developments, B&M European Value Retail, Admiral Group, Berkeley Group Holdings, Ocado Group, Bunzl, Burberry Group and Smith (DS) gained 1 to 2.3%.

Hi-tech software firm Instem soared nearly 40% after it agreed to a £203m takeover by a U.S. private equity firm.

In the German market, RWE and Siemens Energy ended lower by about 4.7% and 3.3%, respectively. Porsche ended 1.6% down, and Siemens lost about 1.25%.

MTU Aero Engines rallied 2.6%. Sartorius, Brenntag, Merck and Adidas gained 1 to 1.2%.

In Paris, Alstom, STMicroElectronics, Engie, Essilor, Eurofins Scientific, LVMH and Pernod Ricard lost 0.6 to 1.25%.

Capgemini climbed 1.5%. Airbus, Carrefour, Teleperformance, Danone, WorldLine and Saint Gobain posted moderate gains.

Shares of Danish renewable energy firm Orsted plunged 24% after the company warned of impairments of up to 5 billion Danish crowns ($729.78 million) on its U.S. portfolio.

On the economic front, Germany's consumer price inflation slowed slightly to a 17-month low in August on slowing food price growth, flash data from Destatis revealed on Wednesday. Consumer prices posted an annual increase of 6.1% in August after rising 6.2% in July. This was the lowest rate since March 2022. Prices were forecast to gain 6%.

Germany's import prices registered its biggest fall since 1987 in July largely due to base effects, data released by Destatis showed on Wednesday.

Import prices were down 13.2% on a yearly basis in July after 11.4% decrease in June. The latest decline was the biggest since January 1987 and also larger than economists' forecast of 12.9%.

On a monthly basis, import prices slid 0.6% but slower than June's 1.6% decline. Economists had expected prices to remain flat in July.

Spain inflation accelerated for the second straight month in August, flash data from the statistical office INE showed. Consumer price inflation rose to 2.6% in August, as expected, from 2.3% in July. The pace strengthened for the second consecutive time after easing for two months.

On a monthly basis, overall consumer prices moved up 0.5%, faster than July's 0.2% rise. This was faster than the 0.4% expected increase.

Euro area economic sentiment reached its lowest level since late 2020 due to weaker confidence among consumers, services, retail trade and construction managers, monthly survey data from European Commission showed. The economic sentiment index declined more-than-expected to 93.3 from 94.5 a month ago.

Sweden's economic confidence weakened in August to the lowest level in just over three years, mainly due to weaker signals from the services sector, survey results published by the National Institute of Economic Research showed on Wednesday.

The economic tendency index dropped to 85.2 in August from 87.5 in the previous month. Further, this was the lowest score since July 2020, when it was 84.5.

The service sector's confidence decreased to 87.2 from 91.3. Expectations of the next three months' demand for the company's services contributed most to the decline.