Shashwat Chauhan, Jesus Calero and Shristi Achar A.
(Reuters) – European shares ended lower on Wednesday, weighed down by losses in property and technology shares, while U.K. shares were supported by mining shares as investors digested inflation data.
The pan-European index closed down almost 0.2%, with the property sector falling 1.2% and technology stocks down 1.1%.
Commodities shares added 0.6%, following a recovery in metals prices and industry-leading growth. [MET/L]
100 recovered previous losses and closed up 0.2%. Data showed UK inflation returned to its 2% target in May for the first time in almost three years, but underlying price pressures remain strong, meaning the Bank of England (BoE) is likely to wait longer before cutting interest rates.
“The economy is stagnating, but not worse. So the cost of being too lenient on inflation and accelerating it again is a greater risk for the Bank of England than keeping the tightening for another meeting or two looking for more data,” he said. Richard Flax, Chief Investment Officer at Moneyfarm.
The market’s focus will now be on interest rate decisions made by the central banks of the UK, Norway and Switzerland later this week.
European shares fell sharply last week after France’s president announced early elections and the country’s high debt levels became a source of concern for market participants.
The European Commission said France and six other countries should be punished for budget deficits exceeding European Union limits, with deficit reduction deadlines to be set in November.
The latest polls show Marine Le Pen’s far-right National Rally party leading ahead of the first round of parliamentary elections in France.
The French index closed down almost 0.8%.
Travel and leisure shares added 0.6% to the pan-European index, helped by the index’s 1.4% rise. Accor (EPA:) after Barclays upgraded the hotel group’s rating from “equal weight” to “overweight”.
SMA Solar Technology AG shares fell 31% after the German solar parts supplier cut its profit forecast, citing political uncertainty.
Shares in Belgian metals recycling group Umicore jumped 3.4% following a double upgrade from JP Morgan.
Trading was sluggish due to the lack of participants from the United States, since markets there were closed due to a holiday.