European Stocks Snap 4-day Winning Streak, Close Lower On Inflation Worries

European stocks closed lower on Thursday, snapping a four-day winning streak, as worries about rising inflation and economic slowdown hurt sentiment.

In addition to digesting the latest batch of economic data from the region, investors also reacted to quarterly earnings updates from big-name companies.

The reversal of unfunded tax cut plans in the U.K., and some upbeat earnings updates helped limit markets‘ downside.

The pan European Stoxx 600 drifted down 0.53%. The U.K.’s FTSE 100 ended 0.17% down, Germany’s DAX slid 0.19% and France’s CAC 40 ended lower by 0.43%, while Switzerland’s SMI shed 0.89%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Norway, Poland, Russia, Spain and Sweden closed weak.

Netherlands, Portugal and Turkiye ended higher.

In the UK market, Kingfisher, Segro, Lloyds Banking Group, Hargreaves Lansdown, RightMove, Dechra Pharmaceuticals, B&M European Value Retail, Harbour Energy, Persimmon and Natwest Group lost 2 to 6%.

BP climbed 2.25%. IAG, Pershing Square Holdings, HSBC Holdings, Vodafone Group, Scottish Mortgage, Imperial Brands, BAE Systems, GSK and Aviva gained 1 to 2%.

In the French market, Saint Gobain drifted down 3.25%. WorldLine shed about 2.5%. LVMH, Capgemini, Kering, Danone, Pernod Ricard and Legrand lost 1 to 2%.

Air France-KLM surged nearly 3%. AXA and Veolia gained about 2.2%. Orange, Valeo and Thales also ended notably higher.

Alstom gained 1.4% after it announced the signing of an agreement to supply ERTMS signaling system for central and southern Italy.

In the German market, medical instruments business Sartorius declined nearly 17% after it announced a fiscal 2022 revenue growth guidance that would be in the lower half of the range of around 15% to 19%.

Merck, HelloFresh and Qiagen lost 4 to 4.5%. Puma, Adidas, Vonovia, RWE, Zalando, Deutsche Wohnen, Porsche Automobil and SAP shed 1 to 3%.

Preliminary data from the Office for National Statistics showed UK consumer price inflation accelerated more-than-expected in September, to reach its recent high marked in July, led mainly by rising food prices.

The consumer price index rose 10.1% year-on-year following a 9.9% increase in August. Economists had forecast inflation to rise 10%.

The latest figure is the highest annual CPI inflation rate in the National Statistic series, which began in January 1997, the ONS said. Compared to the previous month, the CPI climbed 0.5%, same as in August. Economists had forecast a 0.4% rise.

Final data from Eurostat showed Eurozone inflation rose less than estimated in September, advancing to 9.9% in the month, slightly slower than the flash estimate of 10%. The rate was up from 9.1% in August.

Core inflation that excludes energy, food, alcohol and tobacco, increased to 4.8% in September from 4.3% a month ago. The rate came in line with the flash estimate published on September 30.

On a monthly basis, the harmonized index of consumer prices gained 1.2% in September.

Eurozone construction output dropped 0.6% month-over-month in August, reversing a 0.3% rise in July, another data from Eurostat showed.

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