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UPDATE 1-Inflation nerves drive European stocks' worst sell-off in 3 weeks

05/11/2021 04:26
UPDATE 1-Inflation nerves drive European stocks' worst sell-off in 3 weeks

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Tech shares at lowest since late March

Travel stocks caught in European sell-off

Investors brace for strong U.S. inflation data

Adds comment, updates prices

- European stocks retreated from all-time highs on Tuesday, with travel, retail and technology shares among the top losers after worries about rising U.S. inflation knocked back U.S. indexes.

The pan-European STOXX 600 index .STOXX fell 1.9% and was on course for its biggest percentage decline in three weeks. The main bourses in Frankfurt .DAX, Paris .FCHI and London .FTSE all lost close to 2%.

Global sentiment soured after investors dumped Wall Street's market-leading growth stocks on Monday ahead of the latest reading on U.S. consumer prices, which many fear could prompt the Federal Reserve to rethink its monetary policy stance.

"Most will wait for the inflation print to decide whether they need to reduce risk further or see it as an opportunity," Sebastien Galy, senior macro strategist at Nordea Asset Management, wrote in a morning note.

"That suggests that losses today in the European and U.S. equity market should stay below the 2% range."

U.S. tech stocks NQcv1 looked set for another round of sell-off, with Nasdaq futures down 1.3% as investors worried an increase in U.S. interest rates could weigh on their valuations.

European tech shares .SX8P fell 2.3% to their lowest in six weeks, while miners .SXPP handed back some of their strong gains notched in the previous session.

Travel and leisure stocks .SXTP slumped 4.1% as Sweden's Evolution Gaming Group EVOG.ST tumbled 9.1% after the bookrunner announced the pricing of block trades. nFWN2MY0E0

Meanwhile, British Airways-owner IAG ICAG.L dropped 5.9% after announcing a convertible bond offering plan worth 800 million euros. nASN0016HK

German conglomerate Thyssenkrupp TKAG.DE fell 5.9% despite raising its full-year adjusted earnings outlook. The company, however, said no major decisions were to be expected from a supervisory board meeting scheduled for May 19. nL8N2MY1UI

German minerals group K+S SDFGn.DE also slipped 2.6% despite raising its 2021 core profit forecast. nL8N2MY0HY

The pullback in European stocks comes after a strong rally, with the STOXX 600 up about 10% so far this year as a solid earnings season and economy re-opening optimism saw more buying in the economically sensitive parts of the market.

Among the few gainers was UK's lifestyle e-commerce company THG HG Plc THG.L, which soared 12.6% on raising more than $1 billion in equity, including $730 million from Japan's SoftBank Group 9984.T. nL4N2MY1HU

(Reporting by Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty and Subhranshu Sahu)

((sru[email protected]; within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2787;))