Europe: Shares log first quarterly loss in 8; H&M slumps

[BENGALURU] European shares slipped on Thursday (Mar 31), widening a quarterly loss that would be the first in 2 years, led by retail stocks after H&M's profit fell far short of expectations.

Retail stocks lost 5 per cent to log their worst day in more than 2 years. Sweden's H&M plunged 12.9 per cent after saying it would need to raise prices this year and reported weak quarterly profit amid high raw material and transportation costs.

The pan-European stock index fell 0.9 per cent, tracking a global risk-off tone. Market optimism around peace talks fizzled out after Ukrainian President Volodymyr Zelenskiy said his forces were bracing for fresh Russian attacks in the south-east.

Russian President Vladimir Putin on Thursday said he had signed a decree saying foreign buyers must pay in roubles for Russian gas from Apr 1, and contracts would be halted if these payments were not made.

"Selling pressure on European stock markets picked up in the wake of the announcement as it is clear the Russian government is willing to inflict financial pain on countries that don't want to play ball - governments have a difficult choice to make, pay in roubles or face a lights out scenario," said David Madden, market analyst at Equiti Capital.

Putin's move leaves Europe facing the prospect of losing more than a third of its gas supply. Germany has already activated an emergency plan that could lead to rationing.

However, Europe's largest economy will continue paying for energy imports from Russia in euros, Germany's finance minister said.

"Putin is turning up the heat on countries like Germany and Italy, as their economies are heavily reliant on natural gas from Russia," Madden said. Germany's DAX on Tuesday jumped 2.8 per cent on hopes of a resolution to the war, but reversed nearly all of those gains as of Thursday.

Crude prices plunged on news that the United States was considering the largest ever release from its Strategic Petroleum Reserve. Oil and gas stocks shed 0.4 per cent, scaling back some of the declines of 0.8 per cent seen earlier in the day, after Putin's comments.

TotalEnergies and BP fell 2 per cent each.

Meanwhile, data showed price growth hit multi-decade highs in many European countries in March, intensifying a policy dilemma for the European Central Bank.

The Stoxx 600 is down about 6.5 per cent for the January-March period after 7 straight quarters of gains, as investors remain circumspect in the face of the Ukraine crisis.

For the month, however, the index logged its first monthly gain of 2022. Analysts have attributed this partly to equities appearing to be a better hedge to inflation than bonds. REUTERS