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Written by Shashwat Chauhan, Jesus Calero, and Shristi Achar A
(Reuters) – European stocks closed lower on Wednesday, pressured by losses in real estate and technology stocks, while British stocks received support from metal miners as investors digested inflation data.
European stocks closed roughly 0.2% lower, with the real estate sector down 1.2% and technology stocks down 1.1%.
Basic resources stocks rose 0.6%, tracking the recovery in metal prices and leading sector gains. [MET/L]
100 reversed its previous losses to close 0.2% higher. Data showed that UK inflation returned to its 2% target in May for the first time in nearly three years, but underlying price pressures remained strong, meaning the Bank of England is likely to wait longer before cutting interest rates.
“Economies are stagnant, but they’re not worse. So the cost of being too tight on inflation and seeing it accelerate is a bigger risk to (the Bank of England) than keeping things too tight for another meeting or two looking for more data,” he said. Richard Flax, Chief Investment Officer at Moneyfarm.
The market’s focus will now turn to interest rate decisions from the central banks of Britain, Norway and Switzerland later this week.
European stocks saw sharp losses last week after the French president called early elections, with high debt levels a concern for market participants.
The European Commission said that France and six other countries should be disciplined for running a budget deficit that exceeds the limits set by the European Union, with deadlines for reducing the gaps to be set in November.
The latest opinion polls indicate the lead of the far-right National Rally party led by Marine Le Pen before the first round of the French parliamentary elections.
The French index closed down by about 0.8%.
Travel and leisure stocks added 0.6% to the European index, supported by a 1.4% rise. Accor (EPA:) After Barclays upgraded the hotel group to ‘overweight’ from ‘equal weight’.
SMA Solar Technology AG shares fell 31% after the German solar parts supplier cut its earnings guidance, due to political uncertainty.
Shares in Belgian metal recycling group Umicor jumped 3.4% after a double upgrade by JP Morgan.
Trading was light in the absence of American participants, as markets were closed there on the occasion of a public holiday.
