European Shares Retreat As Inflation Worries Mount

European stocks were moving lower on Wednesday amid concerns that a persistent overshoot in inflation might force central banks to tighten their easy monetary policies.

Euro zone government bonds yields rose, with the benchmark German Bund yield hitting a two-year high on concerns that the European Central Bank could decide to scale back its emergency bond-buying program as early as next month.

Euro zone inflation accelerated as expected in April because of a sharp rise in the costs of energy and services, Eurostat reported earlier today.

Consumer prices in the 19 countries sharing the euro rose 0.6 percent sequentially and 1.6 percent from a year earlier, up from the 1.3 percent annual increase in March.

U.K. consumer price inflation exceeded expectations in April on higher energy prices, separate data showed.

Consumer prices advanced 1.5 percent year-on-year in April, more than double the March’s 0.7 percent increase. A similar higher rate was last seen in March 2020.

Investors wait for more clues on policymakers’ views on inflation when the U.S. Federal Reserve releases minutes of its most recent policy meeting later in the day.

The pan European Stoxx 600 dropped 1.2 percent to 437.79 after closing up 0.2 percent on Tuesday. The German DAX fell 1.4 percent, France’s CAC 40 index fell a little over 1 percent and the U.K.’s FTSE 100 was down 0.8 percent.

Swiss wealth manager Julius Baer advanced 1.5 percent after saying it was on track to deliver on financial targets.

ASM International and Infineon Technologies fell around 2 percent on concerns about a global semiconductor shortage and disruption of supply chains due to COVID-19.

Ferguson shares climbed 3 percent as the British plumbing and heating products supplier raised annual guidance after reporting strong revenue growth in its third quarter.

Weaker copper and iron prices weighed on the mining sector, with Anglo American, Antofagasta and Glencore falling 2-3 percent. Oil firm BP Plc and Royal Dutch Shell both were down around 1.6 percent.

Infrastructure investor John Laing Group soared 11.2 percent after U.S. private equity firm KKR & Co. agreed to buy the company for about 2 billion pounds ($2.8 billion).

Premier Foods surged 4.3 percent. The company declared a payout to shareholders after a 13-year break.

Automakers BMW, Daimler, Volkswagen and Renault fell 1-2 percent despite positive data.

European new car registrations rose 24.4 percent year-on-year in the January to April period to 3.4 million units due to the low base of comparison amid coronavirus restrictions, data from the European Automobile Manufacturers Association/ACEA showed.