AMSTERDAM/LONDON: European stocks remained below record highs on Wednesday as inflation worries overshadowed data showing a rise in June business activity, while shares in French luxury goods makers tumbled on the back of a ratings downgrade from HSBC.

The pan-European STOXX 600 was down 0.7%, with France’s Kering and Hermes falling 3.0% and 1.5%, respectively, as HSBC said the market for luxury goods “might take a break as it really could be as good as it gets”.

The broader retail index tumbled 1.3%.

The French and German bourses were among the biggest decliners even as data showed a boom in June service sector activity in both countries amid easing coronavirus restrictions.

The benchmark STOXX 600 pulled back from all-time highs last week following a surprisingly hawkish tone from the US Federal Reserve on inflation and monetary policy.

Economically sensitive sectors including banks, miners and energy have since climbed back up as Fed Chair Jerome Powell reassured markets the central bank would not raise interest rates too quickly based only on the fear of coming inflation.