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European Shares Slide As Inflation Worries Spike

stockmarkets aug16 23jun21 lt

European stocks were broadly lower on Wednesday, as inflation worries overshadowed solid business activity data as well as dovish commentary from Fed officials, including Chairman Jerome Powell.

The euro area private sector grew at the fastest rate in 15 years in June as the economy re-opened further from virus-fighting restrictions and vaccine progress boosted confidence, flash survey data from IHS Markit showed earlier today.

At 59.2, the flash composite output index hit a 180-month high, up from 57.1 in May.

The services Purchasing Managers' Index advanced to 58.0 in June from 55.2 in the previous month, while the manufacturing PMI held steady at 63.1 in June.

Inflation pressures continued to mount as input prices soared in the month. The manufacturing input prices index rose to 88.0 from 87.1, the highest since the survey began in June 1997.

Elsewhere, the flash composite output index for U.K. dropped to 61.7 in June from 62.9 in May.

The rate of input cost inflation accelerated for the fifth month running and was the joint-fastest on record. In turn, the rate of output price inflation hit a fresh record high for the second month running.

The pan European Stoxx 600 dropped half a percent to 454.35 after rising 0.3 percent on Tuesday.

The German DAX shed 0.7 percent and France's CAC 40 index declined 0.6 percent while the U.K.'s FTSE 100 was marginally higher, reversing early losses.

Swiss Re Group edged down slightly after announcing it has reduced its shareholding in Phoenix Group Holdings. Shares of the latter fell 2.5 percent.

British housebuilder Persimmon lost about 1 percent. The company has agreed a number of voluntary informal undertakings relating to its historic sale of leasehold houses with the U.K. competition watchdog.

Property developer and house builder Berkeley Group Holdings fell 1.3 percent as it posted nearly 3 percent growth in its pre-tax profit for the full year, reflecting sale of new homes in London and the South East.

Pernod Ricard shares rose over 2 percent after the French drinks group raised its annual profit guidance, citing a stronger-than-expected recovery with the removal of COVID-19 curbs.

Luxury-goods group LVMH Moët Hennessy Louis Vuitton dropped 1.8 percent on the back of a ratings downgrade from HSBC. Hermes lost 2.1 percent and Kering gave up 3 percent.

German chemical distribution company Brenntag AG was moving lower. The company has announced the acquisition of U.S.-based Storm Chaser Holding Corp., called as JM Swank, from Platinum Equity.

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