Equities retreat on last day of second quarter

LONDON: Stock markets in Europe and the United States pulled back on Wednesday, the final day of the second quarter as investors tracked 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 1.0 percent and Paris dropped 0.8 percent in 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 shed 0.6 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 contracted by 1.6 percent in the three months to March, down from the previous estimate of 1.5 percent.

Wall Street drifted lower at the opening bell, a day after the S&P 500 and Nasdaq Composite both struck new records.

"There's also not a lot of action in the markets after a mixed performance overseas earlier Wednesday. We're in wait-and-see mode ahead of Friday's monthly payrolls report," said market analyst JJ Kinahan at TD Ameritrade.

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

Despite finishing the quarter on the wrong foot, the period from April through to June has been a strong one for equities.

In the second quarter, "the major US indices hit repeated new all-time highs along with the German DAX and Australian S&P/ASX, while the other mainland European indices climbed to multi-year highs," noted analyst Fawad Razaqzada at ThinkMarkets.

Oil prices climbed Wednesday on hopes for upbeat demand 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 1330 GMT

London - FTSE 100: DOWN 0.6 percent at 7,043.34 points

Frankfurt - DAX 30: DOWN 1.0 percent at 15,529.94

Paris - CAC 40: DOWN 0.8 percent at 6,512.31

EURO STOXX 50: DOWN 0.9 percent at 4,069.59

New York - Dow: DOWN less than 0.1 percent at 34,270.12

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)

Euro/dollar: DOWN at $1.1871 from $1.1897 at 2100

Pound/dollar: DOWN at $1.3824 from $1.3836

Euro/pound: DOWN at 85.87 pence from 85.98 pence

Dollar/yen: UP at 110.65 yen from 110.53 yen

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

West Texas Intermediate: UP 0.9 percent at $73.61 per barrel