European equities sink on last day of second quarter

LONDON: Europe's stock markets sank on Wednesday, the final day of the second quarter, as investors shrugged off gains elsewhere to track easing eurozone inflation and lingering coronavirus concerns.

"Europe turned negative, reflecting continued uncertainty about lots of things, not least a degree of caution on the last day of the quarter," noted analyst Neil Wilson at trading site Markets.com.

Frankfurt dived 0.9 percent and Paris dropped 0.8 percent in early afternoon deals, as data showed inflation in the single currency bloc fell back slightly in June to 1.9 percent.

The rate however remains not far from May's 2.0 percent, which had been the highest level since October 2018.

"After dipping below in June, eurozone inflation is likely to rise again in the coming months," said Capital Economics analyst Andrew Kenningham.

"But we think it will drop back early next year and remain low beyond that."

Nevertheless, investors remain on edge over a possible global inflation spike, as pent-up demand in reopening economies sparks upward price pressures.

Policymakers argue that upticks in inflation are mainly one-off effects linked to post-lockdown reopenings and supply chain bottlenecks.

The Bank of England had last week forecast a temporary spike in UK inflation to 3.0 percent this year.

The London stock market meanwhile dipped 0.5 percent on Wednesday after data showed the Covid-hit British economy shrank by slightly more than expected in the first quarter before a subsequent easing of lockdown restrictions.

Gross domestic product dropped 1.6 percent in the three months to March, down from the previous contraction estimate of 1.5 percent.

Elsewhere, Asian equities mostly rose as investors were buoyed by optimism over a strong economic recovery, despite ongoing fears over rising global virus infections.

Traders were given a healthy lead from their US counterparts after the S&P 500 and Nasdaq again finished at records in New York as data showed US consumer confidence surged in June to its highest pandemic-era level.

Oil prices climbed Wednesday on upbeat demand hopes as traders await Thursday's meeting of OPEC and other key crude producers.

Both main oil contracts are sitting around multi-year highs, helped by an American Petroleum Institute report that US stockpiles had fallen last week. That indicated strengthening demand in the world's biggest crude consuming nation.

Key figures at 1100 GMT

London - FTSE 100: DOWN 0.5 percent at 7,049.60 points

Frankfurt - DAX 30: DOWN 0.9 percent at 15,546.15

Paris - CAC 40: DOWN 0.8 percent at 6,518.20

EURO STOXX 50: DOWN 0.9 percent at 4,071.19

Tokyo - Nikkei 225: DOWN 0.1 percent at 28,791.53 (close)

Hong Kong - Hang Seng Index: DOWN 0.6 percent at 28,827.95 (close)

Shanghai - Composite: UP 0.5 percent at 3,591.20 (close)

New York - Dow: UP less than 0.1 percent at 34,292.29 (close)

Euro/dollar: DOWN at $1.1887 from $1.1897 at 2100 GMT

Pound/dollar: DOWN at $1.3833 from $1.3836

Euro/pound: DOWN at 85.96 pence from 85.98 pence

Dollar/yen: UNCHANGED at 110.53 yen

Brent North Sea crude: UP 0.6 percent at $75.23 per barrel

West Texas Intermediate: UP 1.1 percent at $73.77 per barrel