Europe: Stocks mark worst sell-off this year, travel and tech tumble

[BENGALURU] - European stocks tumbled from all-time highs on Tuesday, with the travel, retail and technology sectors among the top losers after global sentiment turned risk-averse on worries about rising inflation in the United States.

The pan-European Stoxx 600 index fell 2.0 per cent, its biggest percentage decline since late December. The main bourses in Frankfurt, Paris and London all lost more than 2 per cent.

Wall Street's main indexes slid for the second straight day, with the benchmark S&P 500 hitting a one-month low on fears that rising inflation could push the US Federal Reserve to tighten monetary policy faster than expected.

"We will see inflation bounce back in the short term. The second thing is we have bottlenecks in certain areas," said Niall Gallagher, European equity fund manager at GAM.

Gallagher said jumps in commodity prices and issues around semiconductors were some of the factors that will lead to a short-term spike in inflation.

European technology shares fell 2 per cent to their lowest in six weeks, while mining firms handed back some of the strong gains notched up in the previous session.

Travel and leisure stocks slumped 5.7 per cent overall.

Sweden's Evolution Gaming Group tumbled 13.8 per cent after the bookrunner announced the pricing of block trades.

Meanwhile, British Airways' owner, IAG, slumped 7.4 per cent after announcing a convertible bond offering worth 800 million euros.

German conglomerate Thyssenkrupp tumbled 10.2 per cent as its closely watched cash flow plunged deeper into the red in the second quarter, hit by restructuring costs and investments.

German minerals group K+S fell 2.7 per cent despite raising its 2021 core profit forecast.

The pullback in European stocks comes after a strong rally, with the STOXX 600 up 9 per cent so far this year as a solid earnings season and optimism about the reopening of the economy saw more buying in economy-sensitive parts of the market.

Among the few gainers was the UK lifestyle e-commerce company THG HG Plc, which soared 11.9 per cent after raising more than US$1 billion in equity, including US$730 million from Japan's SoftBank Group.

REUTERS