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European stocks dragged down by healthcare; German inflation data in focus

Published 04/02/2024, 03:38 AM
Updated 04/02/2024, 12:30 PM
© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 20, 2024. REUTERS/Staff/File Photo

By Johann M Cherian and Ankika Biswas

(Reuters) -European stocks made a downbeat start to the second quarter, pressured by healthcare shares, while investors parsed inflation data from the continent's largest economy Germany for clues on the timing of European Central Bank interest rate cuts.

The continent-wide STOXX 600 closed 0.8% lower on Tuesday, slipping to a one-week low after hitting an all-time intraday high, with investors returning after an extended weekend and the Easter holiday.

Speculation about imminent interest rate cuts has convinced investors to buy into risky assets in recent weeks, even as the benchmark index trades close to record highs after notching its second straight quarter of gains.

But equities fell back on Tuesday, also weighed down by rising euro zone bond yields.

Preliminary data showed German inflation eased slightly more than expected in March, helped by lower energy prices. That came a day ahead of broader euro zone inflation data.

Commerzbank (ETR:CBKG) Research analysts said they expected March to be a trough in German inflation and that it was set to rise again in the coming months, with the core rate stabilising above the ECB's 2% target.

Among major sectors, healthcare lost 1.6% after recent gains. Siegfried Holding dropped 5.4% as the Swiss pharmaceutical company's CEO Wolfgang Wienand is set to step down to join Lonza.

Retail, real estate, and travel and leisure also dropped over 2% each.

On the flip side, energy stocks gained 2.5%, hitting a more than five-month high, as oil prices jumped on fresh threats from Ukrainian attacks on Russian energy facilities and escalating conflict in the Middle East.

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Norway's oil-heavy benchmark index also rose 1.5%. Equinor gained 4% after Bernstein initiated coverage of the Norwegian stock with an "outperform" rating.

Basic resources also climbed 1.8% to hit a more than two-month high, tracking strong metal prices.

As for individual movers, SSAB lost 6.1% on the Swedish steelmaker's plans to invest 4.5 billion euros ($4.8 billion) in building a fossil-free mini-mill in Lulea, Sweden, more than previously expected.

Superdry plunged 55% to a record low after the British fashion retailer's CEO and top shareholder Julian Dunkerton said he would not be making an offer for the company.

Ionos Group surged 11.5% after the web hosting and cloud company won a contract from the German federal administration.

Soltec lost 7.4% after the Spanish solar equipment manufacturer restated its 2023 results and reported a net loss of 23.4 million euros.

($1 = 0.9290 euros)

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