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UPDATE 2-European stocks mark worst sell-off this year, travel and tech tumble

05/11/2021 04:26
UPDATE 2-European stocks mark worst sell-off this year, travel and tech tumble

Tech shares at lowest since late March

Travel stocks caught in European sell-off

Investors brace for strong U.S. inflation data

Adds comments, updates prices throughout

By Shreyashi Sanyal and Sruthi Shankar

- European stocks tumbled from all-time highs on Tuesday, with the travel, retail and technology sectors among the top losers after global sentiment turned risk-averse on worries about rising inflation in the United States.

The pan-European STOXX 600 index .STOXX fell 2.0%, its biggest percentage decline since late December. The main bourses in Frankfurt .DAX, Paris .FCHI and London .FTSE all lost more than 2%.

Wall Street's main indexes slid for the second straight day, with the benchmark S&P 500 .SPX hitting a one-month low on fears that rising inflation could push the U.S. Federal Reserve to tighten monetary policy faster than expected. .N

"We will see inflation bounce back in the short term. The second thing is we have bottlenecks in certain areas," said Niall Gallagher, European equity fund manager at GAM.

Gallagher said jumps in commodity prices and issues around semiconductors were some of the factors that will lead to a short-term spike in inflation.

European technology shares .SX8P fell 2% to their lowest in six weeks, while mining firms .SXPP handed back some of the strong gains notched up in the previous session.

Travel and leisure stocks .SXTP slumped 5.7% overall. Sweden's Evolution Gaming Group EVOG.ST tumbled 13.8% after the bookrunner announced the pricing of block trades. nFWN2MY0E0

Meanwhile, British Airways' owner, IAG ICAG.L, slumped 7.4% after announcing a convertible bond offering worth 800 million euros. nASN0016HK

German conglomerate Thyssenkrupp TKAG.DE tumbled 10.2% as its closely watched cash flow plunged deeper into the red in the second quarter, hit by restructuring costs and investments. [nL8N2MY0QF]

German minerals group K+S SDFGn.DE fell 2.7% despite raising its 2021 core profit forecast. nL8N2MY0HY

The pullback in European stocks comes after a strong rally, with the STOXX 600 up 9% so far this year as a solid earnings season and optimism about the reopening of the economy saw more buying in economy-sensitive parts of the market.

Among the few gainers was the UK lifestyle e-commerce company THG HG Plc THG.L, which soared 11.9% after 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 Kevin Liffey)

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