European Stocks Close Lower As UK Inflation Rises To Near Nine-year High

European stocks closed notably lower on Wednesday, weighed down by data showing an acceleration in UK inflation and disappointing retail sales and industrial production data out of China.

Data showing UK’s inflation accelerated to a more than 8-1/2-year high of 3.2% in August has triggered speculation that the Bank of England might soon start tapering its stimulus.

The pan European Stoxx 600 declined 0.8%. The U.K.’s FTSE 100 shed 0.25%, Germany’s DAX drifted down 0.68% and France’s CAC 40 lost 1.04%, while Switzerland’s SMI lost 0.93%.

Among other markets in Europe, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Poland, Portugal, Spain, Sweden and Turkey closed weak.

Norway and Russia moved higher, while Austria and Ukraine ended flat.

In the UK market, Just Eat Takeaway.com declined 4.5%. IAG, Burberry Group, Rolls-Royce Holdings, Associated British Foods, Whitbread, Bunzl, Johnson Matthey, Ocado Group, ICP and British Land Company ended lower by 2 to 3.5%.

Evraz climbed 3.6%. BP and Antofagasta gained 3.1% and 2.7%, respectively. Royal Dutch Shell, Imperial Brands, Royal Dutch Shell, Lloyds Banking Group, Glencore, Reckitt Benckiser, Weir Group and Natwest Group gained 1 to 1.8%.

Shares of oil & gas company Tullow Oil moved up sharply after the firm swung back to profit in the first half of 2021.

In the French market, Atos, Pernod Ricard, Kerring, LVMH, WorldLine, Vivendi and Accor lost 2.3 to 4%. Unibail Rodamco, Vinci, Faurecia, Hermes International, Air France-KLM, Sodexo, Renault and Michelin also ended notably lower.

Technip gained more than 5% and ArcelorMittal rallied nearly 4%.

In Germany, Puma declined 3.7%, Adidas and Fresenius Medical Care both ended lower by nearly 3%, while RWE, Fresenius and Covestro lost 2.3 to 2.7%.

Shares of Swedish retailer Hennes & Mauritz AB declined sharply after sales grew less than expected in the three months to the end of August.

Fashion brand Zara owner Inditex ended notably lower despite sales approaching pre-pandemic levels.

Swiss drug major Roche was weak after announcing it has no plan to enter legal disputes with drug makers such as Hetero over patent rights.

Eurostat reported that industrial output in the 19 countries sharing the euro rose 1.5% month-on-month in July for a 7.7% year-on-year rise.

Elsewhere, data showed that the U.K.’s annual consumer inflation accelerated at the fastest pace on record in August.

Data from the Office for National Statistics showed that the consumer price index rose 3.2% year-on-year following a 2% climb in July. Economists had forecast 2.9% inflation.

The 1.2 percentage point increase was the largest ever recorded in the 12-month rate series that began in January 1997.

Output price inflation accelerated more than expected to the highest since 2011, raising questions for the Bank of England on the timing of tightening monetary policy and interest rate hikes.

Output price inflation increased to 5.9% in August from 5.1% in July. The rate was expected to climb moderately to 5.4%. This was the highest rate since November 2011.

China’s retail sales grew only 2.5% on a yearly basis in August, data published by the National Bureau of Statistics showed. This was much weaker than July’s 8.5% growth and the expected rate of 7%.

Industrial production in China grew moderately by 5.3% year-on-year in August, but slower than the 6.4% increase seen in July and the economists’ forecast of 5.8%.