European Shares Subdued As China Data Disappoints

European stocks were subdued on Wednesday as weak Chinese data, a strong inflation reading in the U.K. and disappointing sales from fashion retailer H&M raised concerns about the global economic recovery.

China’s industrial output in August rose at its weakest pace since July 2020 and retail sales growth also slowed significantly due to strict COVID-19 curbs, heightening concerns about slowing growth in the world’s second-biggest economy.

The pan European Stoxx 600 was down 0.1 percent at 467.06, recouping some of earlier losses after Eurozone industrial production increased in July, beating expectations despite supply-chain bottlenecks.

Eurostat reported that industrial output in the 19 countries sharing the euro rose 1.5 percent month-on-month in July for a 7.7 percent 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 percent year-on-year following a 2.0 percent climb in July. Economists had forecast 2.9 percent 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 percent in August from 5.1 percent in July. The rate was expected to climb moderately to 5.4 percent. This was the highest rate since November 2011.

The German DAX and the U.K.’s FTSE 100 were marginally higher, reversing early losses, while France’s CAC 40 index was down 0.2 percent.

Swedish retailer Hennes & Mauritz AB tumbled 3.1 percent after sales at the world’s second-biggest fashion retailer grew less than expected in the three months to the end of August.

Fashion brand Zara owner Inditex declined 1.7 percent despite sales approaching pre-pandemic levels.

Swiss drug major Roche fell over 1 percent after announcing it has no plan to enter legal disputes with drug makers such as Hetero over patent rights.

Shares of zooplus AG fell 2.7 percent as financial investor KKR terminated discussions regarding a potential voluntary public takeover offer for the German online pet platform.

British oil & gas company Tullow Oil surged 6.7 percent after it swung back to profit in the first half of 2021.

Restaurant Group tumbled 3.5 percent after reporting lackluster results for the first half of the year.

Travel and leisure stocks declined, with Lufthansa, Air France KLM, IAG and EasyJet falling 1-3 percent on concerns about the spread of COVID-19 cases in China.

China tightened lockdowns and increased orders for mass testing in cities along its east coast today amid the latest surge in coronavirus cases.

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