European shares snap 9-day winning streak on Fed jitters

  • 6/17/2021
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(Reuters) -European shares ended a touch lower on Thursday as hawkish signals from the U.S. Federal Reserve raised concerns over early policy tightening, with mining stocks falling the most as commodity prices tumbled. The pan-European STOXX 600 index was down 0.1% at 459.33, snapping a nine-day gaining streak, after the Fed said it could begin raising interest rates a year earlier than expected. Mining stocks were the worst performers, sinking 2.5% as the U.S. central bank’s comments lifted the dollar and dented commodity prices. Utility and chemical shares were also among the biggest decliners. Losses in major mining stocks saw the FTSE 100 shed 0.4%. Bank stocks were among the best performers for the day, adding 0.4% as bond yields rose on the Fed. But losses in major Spanish lenders, on the heels of an antitrust probe, pushed the sector off intraday highs. Euro zone inflation rose as expected in May, data showed on Thursday, driven by a sharp spike in energy prices and more expensive services. While the figure was a shade above the European Central Bank’s target, the ECB has struck a different tone on policy than the Fed. The ECB said last week that it was too early to debate closing the money taps despite a recent rise in inflation. “While central banks may seem fairly relaxed about the inflation outlook, they still have to look a lot further out, and if the economy improves as expected, monetary policy will have to change,” said Michael Hewson, chief market analyst at CMC Markets UK. “The fact that the Fed is slowly preparing the ground now may be unsettling for markets, but it is also necessary, and in the here and now, monetary policy still hasn’t changed that much.” European shares have rallied to record highs on dovish signals from the ECB, with optimism over an economic recovery this year also supporting sentiment. In company news, German biotech CureVac NV tumbled 44.3%, marking its worst day on record after its COVID-19 vaccine missed the main goal in a late-stage trial. European travel stocks rose 0.1% as Britain said it was considering allowing those who are double vaccinated against COVID-19 to enjoy a foreign holiday without intrusive red tape. British train ticket seller Trainline surged 5.1% to the top of the STOXX 600, after it posted a staggering 269% jump in first-quarter UK ticket sales. Reporting by Sagarika Jaisinghani and Ambar Warrick in Bengaluru; Editing by Shounak Dasgupta and Catherine Evans Our Standards: The Thomson Reuters Trust Principles.

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