Major European Markets Snap 3-day Winning Streak, Close Modestly Lower

(RTTNews) - Despite opening on a positive note, the major European markets snapped a three-day winning streak and closed lower on Wednesday as the mood turned cautious ahead of the European Central Bank's policy announcement, due on Thursday.

Lingering concerns about soaring inflation, slowing growth and policy tightening by central banks weighed on stocks. The IMF's remarks that the EU economy could shrink as much as 2.65% if there was a Russian gas embargo weighed as well on sentiment.

The European Central Bank is seen raising interest rates for the first time in 11 years at Thursday's meeting of the governing council.

In economic releases, Germany's producer price inflation eased unexpectedly in June from a record high in May, while U.K. consumer inflation hit a new 40-year high in June on rising motor fuel and food prices, separate reports showed.

On the political front, Italian Prime Minister Mario Draghi said in a speech to the Senate today that he is willing to put together a new coalition.

The pan European Stoxx 600 ended down 0.21%. The U.K.'s FTSE 100 drifted down 0.44%, while Germany's DAX and France's CAC 40 closed lower by 0.2% and 0.27%, respectively. Switzerland's SMI shed 0.56%.

Among the other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Portugal and Spain ended moderately lower, while Iceland plunged sharply.

Finland, Greece, Ireland, Netherlands, Norway, Poland, Russia and Turkey closed higher, while Sweden ended flat.

In the UK market, Smith (DS), AstraZeneca, Rolls-Royce Holdings, Reckitt Benckiser, British American Tobacco, Imperial Brands and Prudential ended sharply lower.

Scottish Mortgage rallied nearly 5%. Ashtead Group, Aveva Group, Ocado Group, Entain, WPP, Sage Group and Flutter Entertainment gained 2 to 3.5%.

In the German market, HelloFresh plunged nearly 10%. Fresenius, Siemens Healthineers, Daimler, HeidelbergCement, Henkei, Porsche Automobil, Volkswagen and Munich RE shed 1 to 2%.

Deutsche Post, Infineon Technologies, Zalando and Bayer gained 1.3 to 2%.

Uniper shares zoomed nearly 13%. The company is nearing a bailout deal that may see the German government inject billions of euros and take a direct stake in the energy giant, the Bloomberg said, citing people familiar with the matter.

In the French market, Veolia, Airbus Group, Thales, Orange, Sanofi, L'Oreal, Danone and Vinci ended lower by 1 to 2.5%.

STMicroElectronics, Dassault Systemes, Publicis Groupe, Vivendi, Legrand, Atos, BNP Paribas, ArcelorMittal and Schneider Electric gained 1 to 2.5%.

UK consumer prices grew at the sharpest pace in four decades in June and factory gate inflation hit the highest since 1977, raising prospects of a 50 basis point rate hike by the Bank of England at its August meeting.

Consumer price inflation accelerated more-than-expected to 9.4% in June on rising motor fuel and food prices, the Office for National Statistics said Wednesday. Inflation was forecast to rise to 9.3% from 9.1% in May.

Inflation was the highest since early 1982. The BoE forecast inflation to peak slightly above 11% in October.

Germany's producer price inflation eased unexpectedly in June from a record high in May, though marginally, data from Destatis showed.

Producer prices grew 32.7% year-over-year in June, following a 33.6% surge in May. Economists had forecast inflation to rise to 33.9%.

The overall strong producer price inflation in June was primarily driven by an 86.1% jump in energy prices amid soaring natural gas costs. Excluding energy, producer prices were 15.5% higher in June compared to last year.