European stock markets retreated Wednesday as investors reacted to stronger than expected U.S. inflation data.
The Stoxx 600 index was down by 0.4% during afternoon deals as most sectors and major bourses declined. Industrials stocks dropped 0.8% to lead losses.
It comes shortly after U.S. inflation data for August exceeded expectations. The consumer price index, which measures costs across a broad variety of goods and services, rose 3.7% from a year ago, the U.S. Department of Labor reported Wednesday. Economists surveyed by Dow Jones had forecast an increase of 3.6%. On a monthly basis, prices increased 0.6%, in line with expectations.
Core CPI, which strips out food and energy and is closely monitored by the Federal Reserve, rose by 0.3% on the month and 4.3% on the year. Economists polled by Dow Jones signaled rises of 0.2% and 4.3%, respectively.
Autos briefly rallied in morning trade after European Commission President Ursula von der Leyen said the EU would launch an investigation into subsidies given to electric vehicle makers in China.
The sector rose as much as 2% after the announcement before falling to a slight loss. Von der Leyen said Europe was “open to competition but not for a race to the bottom.”
Zara owner Inditex, the world’s biggest fast fashion retailer, dipped 3% despite reporting interim half-year results that beat expectations and showed a 14% rise in gross profit. Analyst reactions suggested higher operating expenses and concerns over future performance may have spooked some investors, as others took profits.
On the data front, official figures showed the U.K. economy contracted by 0.5% in July. Economists in a Reuters poll had signalled a 0.2% fall.