European shares fell on Tuesday, with UK’s Ocado sinking after a worse-than-expected full-year loss, while data from France and Spain pointed to inflation being stickier than feared.
The continent-wide STOXX 600 index (.STOXX) slipped 0.3% in the first hour of trading, after closing sharply higher in the previous session.
“Whether it be Spain, France or Germany, the European Central Bank has to basically take into account stickier inflation because you’re talking about three out of four of the biggest economies in Europe,” said Michael Hewson, chief market analyst at CMC Markets UK.
Higher food prices pushed the 12-month inflation rate in France to 7.2% in February from 7.0% in the preceding month.
In Spain, consumer prices rose 6.1% year-on-year in February, over a 5.9% rise in the 12 months to January.
“So you can’t very well ignore it and consequently, that means we’re going to get 50 basis points in March,” Hewson said.
Investors are expecting the ECB to hike interest rates by 50 basis points in its upcoming March meeting, taking the benchmark rate to 3%. Rates are expected to hit a peak of 4% in July.
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