European shares retreat amid inflation spike worries

European shares retreated from near one-year highs on Wednesday as concerns over a possible spike in inflation and rising bond yields prompted investors to pull back from risk-driven assets.

Luxury group Kering, owner of the Gucci brand, led losses after posting lower sales, while British American Tobacco also slumped despite reporting positive earnings.

Dublin

The Iseq shed 0.5 per cent as key stocks declined in line with the negative mood across Europe. Packaging company Smurfit Kappa fell 3.2 per cent to €41.52 amid the nervous sentiment, while building materials group CRH – the largest stock on the Dublin market – ended 1.8 per cent lower at €36.45.

Ryanair was another faller, losing almost 2 per cent to close at €15.86. The airline lost its challenge to state aid for Air France and SAS, after a European court decided that the support did not break the rules.

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The big company news of the day came from fresh produce distributor Total Produce, which saw its Dublin shares jump more than 32 per cent to €1.94 after it announced a merger with Dole Food Company.

The deal, which will create the world's largest fresh fruit and vegetable supply business, will see Total Produce delist from both Euronext Dublin and London Stock Exchange, with the combined Dole plc listing in the US.

Elsewhere, Kerry climbed 1.24 per cent to €105.20 and Glanbia added 0.6 per cent to €9.94, while insulation maker Kingspan added 3 per cent to €54.65.

London

British shares ended lower on Wednesday as a third national lockdown affected demand for new goods leading inflation to pick up a little more than expected in January.

The commodity-heavy FTSE 100 ended 0.6 per cent lower, with construction and financial stocks leading declines. British American Tobacco was the biggest drag, falling 3.9 per cent despite better-than-expected earnings. The mid-cap FTSE 250 index ended 1.3 per cent lower.

Investment platform Hargreaves Lansdown dropped 6.9 per cent to the bottom of the blue-chip index after its largest shareholder sold $416 million worth of shares.

Mining company Rio Tinto fell 0.4 per cent after reporting its best annual earnings since 2011 and declaring a record dividend payout.

Signature Aviation slid 0.2 per cent after agreeing to sell its engine repairs business to US company StandardAero for $230 million.

Europe

The pan-European Stoxx 600 index closed 0.7 per cent lower. In Frankfurt, the German Dax fell 1.1 per cent, while in Paris the Cac 40 declined 0.4 per cent. Italian and Spanish stocks also fell.

French conglomerate Kering bottomed out the Stoxx 600 as it said sales from its Gucci brand fell 10.3 per cent in the fourth quarter. The broader European retail index lost 3.1 per cent and lagged its peers for the day.

Nivea maker Beiersdorf tumbled 5.9 per cent after it said it did not expect a recovery in profitability in 2021 even though sales should rise.

Swedish cloud computing services provider Sinch topped the Stoxx 600 after it agreed to buy US-based communications company Inteliquent for $1.14 billion.

US

The Nasdaq fell in early trading, led by a slide in shares of technology-related companies as investors rotated out of growth stocks and awaited the release of minutes from the US Federal Reserve’s January meeting.

Shares in Dow Jones components Verizon Communications and energy giant Chevron rose 4.3 per cent and 1.8 per cent respectively after Warren Buffett's Berkshire Hathaway disclosed major investments in the companies on Tuesday.

Wells Fargo jumped 5.5 per cent after a report said the lender won Fed acceptance for overhauling risk management and governance tied to regulatory asset cap.

Shopify slid 5.3 per cent after the Canadian ecommerce giant hinted at slower revenue growth in 2021 as vaccine rollouts encourage people to return to stores. – Additional reporting: Reuters