BERLIN, June 1 — European shares gave up early gains today as weak German retail sales and slowing factory activity in the euro zone fanned worries about economic growth amid record high inflation.
The pan-European STOXX 600 index was down 0.3 per cent, after gaining as much as 0.4 per cent in early trading. The benchmark shed 1.6 per cent in May as surging inflation stoked worries about aggressive central bank action.
German retail sales fell a more-than-expected 5.4 per cent in April, data showed, while manufacturing growth in the euro zone slowed last month as factories faced supply shortages, high prices and a fall in demand.
“The price action we have seen this week in stocks is very much indicative of the overall uncertainty in the markets at present,” said Stuart Cole, head macro economist at Equiti Capital.
“Yesterday’s stronger-than-expected inflation figures from the EU re-ignited fears about how high interest rates might be raised generally. The key fear is that central bank actions will inadvertently induce recessions.”
Deutsche Bank economists raised expectations over European Central Bank policy tightening and expect 50 basis points increase in interest rates in September.
On the STOXX 600, declines in commodity linked stocks and tech outweighed gained in banks and consumer shares.
Regional bourses were mixed. Commodity heavy FTSE 100 slipped 0.1 per cent, while Germany’s DAX gained 0.2 per cent, lifted by automakers.
The STOXX 600 has marked losses for all months except March this year, as investors worried about high inflation, central bank policy tightening and the fallout from the Russia-Ukraine conflict.
Investor hopes that inflation might have peaked are being challenged by oil prices, which climbed over US$120 (RM526) per barrel yesterday after European Union leaders agreed to a partial and phased ban on Russian oil.
Among individual stocks, British footwear brand Dr. Martens surged 26.2 per cent after it forecast higher annual revenue growth, thanks to price hikes made in response to soaring inflation and stronger sales of its shoes and boots.
Deutsche Bank’s asset manager DWS slumped 7 per cent after its chief executive officer said he would step down next week, as the company faced allegations of misleading investors about “green” investments. — Reuters
