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* RBA’s large interest rate hike spurs tightening worries
* German industrial orders fall more than expected in April
* Ted Baker plunges as preferred bidder backs out
* Biffa surges on $1.7 billion bid
June 7 (Reuters) – European shares fell on Tuesday as
investors worried about the squeeze to economic growth from
aggressive monetary policy tightening by central banks in a bid
to tame rising inflation.
The pan-European STOXX 600 index fell 0.5%, giving
back half of Monday’s gains, with tech shares leading declines.
Australia’s central bank raised interest rates by the most
in 22 years and flagged more tightening to battle rising prices.
This comes as investors await a European Central Bank (ECB)
meeting and U.S. inflation data this week.
The ECB has signalled rate hikes starting next month, and
investors wait to see if record high inflation in May would lead
to a change in stance at Thursday’s meeting.
“The bar for a hawkish surprise on Thursday (from the ECB)
is set quite high,” strategists at ING said.
“The only really interesting question is why it doesn’t
start hiking rates immediately instead of waiting until July.”
On Friday, data is expected to show a rise in May U.S.
consumer prices, leading to some speculation that the Federal
Reserve may need to carry on hikes beyond July.
Underlining slowing economic growth, data showed German
industrial orders fell more than expected in April, the third
decline in a row, driven by weakened demand and heightened
uncertainty due to the Russian-Ukraine conflict.
Rate-sensitive technology stocks dropped 1.1%, with
French software maker Dassault Systemes shedding 2.5%
after a brokerage downgraded the stock.
London’s FTSE 100 fared better, trading flat as the
UK Prime Minister Boris Johnson seeks to shore up his
position among senior ministers with a raft of new policies,
after surviving a no-confidence vote on Monday.
“We think markets are overpricing the impact of recent
political noise on the UK economy and we expect volatility… to
decrease over the coming days,” ING said.
Among individual stocks, Biffa jumped 28.4% after
it received a possible buyout offer from affiliates of private
equity firm Energy Capital Partners, valuing the British
waste-management specialist at about 1.36 billion pounds ($1.69
British fashion chain Ted Baker plunged 21.2% after
it said its preferred bidder backed out of making a takeover
SAS slumped 9.5% after the Swedish government said
it would not inject new capital into the loss-making airline and
did not aim to be a long-term shareholder in the company.
(Reporting by Susan Mathew in Bengaluru; Editing by Shounak
Dasgupta and Subhranshu Sahu)