LDN - Business

European stocks slide in caution ahead of U.S. inflation data

[December 10, 2021] By Anisha Sircar

(Reuters) -European stocks inched lower on Friday as nervousness around the Omicron COVID-19 variant and U.S. inflation reading due later in the day kept sentiment in check.

The pan-European STOXX 600 was down 0.4%, tracking risk-off moves in global equities as investors worried a hot reading on U.S. consumer prices could spur the Federal Reserve to tighten monetary policy faster.

Technology, retail and healthcare sectors were the top decliners in Europe.

"We think the path for equities is lower over the next 12 months," said Milla Savova, European equity strategist at Bank of America.

"Real bond yields will come up from record lows as the Fed turns more hawkish and the market starts to price in a sharper-than-expected Fed hiking cycle. This combination of slowing growth and rising real bond yields will be a key theme going into the next year."

The U.S. data, due at 8:30 a.m. ET, is likely to show consumer prices rose 6.8% in November, a level that would be the highest since 1982.

On the contrary, news that the European Central Bank is widely considering a temporary increase to its bond purchase plan at a policy meeting next week was seen as a dovish step.

Overall, the STOXX 600 was set to notch a 2.6% weekly rise following a strong rebound earlier this week on signs that the Omicron variant could be milder than initially feared.

Autos, which jumped 1.1%, and miners were among the few sectors gaining, with the latter tracking higher copper prices on the back of monetary policy easing by top consumer China. [MET/L]

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The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, December 9, 2021. REUTERS/Staff

Daimler AG added 2.9%, reversing sharp falls earlier after spun-off Daimler Truck climbed in its market debut on the Frankfurt Stock Exchange.

Gains for the sector came even as data showed China's auto sales dropped 9.1% in November, marking their seventh consecutive monthly fall, as a prolonged global shortage of semiconductors disrupted production.

Shares of Bayer rose 2.1% after a California jury found that the chemical giant's Roundup weedkiller was not the cause of a woman's non-Hodgkin's lymphoma - its second trial victory over claims the herbicide causes cancer.

Tobacco group Swedish Match jumped 7.1% after the Wall Street Journal reported that U.S. Democrats dropped a proposed vaping tax that would have taxed e-cigarettes like regular ones.

Food delivery companies Deliveroo and Just Eat Takeaway slipped 1.8% and 0.9%, respectively, adding to losses in the past week on worries that a European Commission ruling on gig economy drivers would hurt profits.

(Reporting by Anisha Sircar in Bengaluru; Editing by Sriraj Kalluvila and Maju Samuel)

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