LONDON: European stocks ended flat on Tuesday, with miners, banks and luxury stocks leading declines as optimism over cooling US inflation growth in August proved to be short-lived.
The region-wide STOXX 600 index inched 0.01% lower, with the basic resources sector index dropping 1.9% and banks sliding 1.1%.
“Having got off to a positive start yesterday, today’s price action looks set to follow the pattern of last week, where after a similar Monday rally, sentiment deteriorated as concerns about profit margins in the face of rising prices saw certain sectors come under further pressure,” said Michael Hewson, chief market analyst at CMC Markets UK.
Luxury stocks, including LVMH, Kering, Richemont and Burberry, fell between 1.9% and 3%, tracking moves in Asia on concerns about the spread of COVID-19 cases in China.
“Ongoing China coronavirus concerns and lockdowns in several cities in Fujian are not helping sentiment,” said Mark Taylor, sales trader at Mirabaud Securities.
Home to many luxury names, France’s CAC 40 fell 0.4%, while the UK’s miner-heavy FTSE 100 shed 0.5%.
Still, many strategists expect European equities to outperform this year due to relatively high rate of vaccinations and catch-up trade in cheaper segments of the market such as banks and energy.
Data earlier in the day showed underlying US consumer prices increased at their slowest pace in six months in August, suggesting that inflation had probably peaked, though it could remain high for a while amid persistent supply constraints.