European indices end lower, centered on US inflation data

By Sreyashi Sanyal and Anisha Sircar

(Reuters) – European shares fell on Tuesday as cautious investors awaited U.S. inflation data on Wednesday, looking for clues about the Federal Reserve’s next move on interest rate hikes.

The pan-European STOXX 600 index fell 0.6%, erasing most of the previous day’s gains as it posted its best session in nearly two weeks.

Tuesday’s declines led tech stocks, sensitive to interest rate changes, amid a rise in bond yields.

Traders are betting on a 0.50 percentage point hike in interest rates by the European Central Bank (ECB) in September, and a 0.75 percentage point hike in US rates next month is more likely.

Bank stocks were the best performers, up 0.1%.

Companies in economically important sectors such as mining and automobiles also fell after being major gainers in the previous session.

“Uncertainty and volatility remain high due to slower growth, lower profits, interest rate hikes by major central banks and further tightening of European natural gas supplies in the winter months,” said chief economist Nick Brooks. and investment research at ICG.

Attention turns to a key inflation gauge in the world’s largest economy due to be released on Wednesday. The numbers came on the back of surprisingly strong employment data last week, which dampened hopes that the Federal Reserve will take it easy on a series of rate hikes aimed at combating price pressures.