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Europe shares slide as commodities weigh

written by Bella Palmer

The Stoxx 600 ended 0.5% lower, snapping a three-day winning streak

European shares slid on Tuesday as declining commodity prices weighed on mining and energy stocks, though caution remained ahead of the ECB’s interest rate decision later this week.

The Stoxx 600 ended 0.5% lower, snapping a three-day winning streak.

Energy stocks led losses with a 2.6% decline, reaching a more than two-month low, tracking a more than 1% drop in oil prices on scepticism about an Opec+ decision to boost supply later this year into a global market where demand has already shown signs of weakness.

Low crude prices, and the weaker economic data seen both sides of the (Atlantic) may provide some comfort for those on rate-setting committees hoping for an earlier cut to borrowing costs, according to Derren Nathan, head of equity research at Hargreaves Lansdown.

Basic Resources, which houses Europe’s biggest mining companies, slid 2.3% amid declining prices of metals like gold and copper.

A risk-off mood also set in as market participants awaited the European Central Bank’s rate verdict on Thursday, where it is expected to ease borrowing costs by 25 bps.

The recent uptick in the eurozone inflation data, however, has cast doubt on further monetary easing prospects this year.

Most of the continent’s bourses dropped, with France’s CAC 40 down 0.8%, while London’s FTSE 100 and Germany’s DAX 40 dropped 0.4% and 1%, respectively.

On the data front, the number of people out of work in Germany increased more than expected in May, while Swiss inflation was steady in May, raising market expectations the Swiss National Bank will reduce interest rates again later this month.

Among individual stocks, British oil giant BP dropped 3.8% after ratings agency S&P Global revised the company’s credit outlook lower.

Allianz dipped 3.3% after Citigroup downgraded the German insurer to “neutral” from “buy”.

Mobile retailer and service provider Freenet advanced 3.6% after UBS upgraded its rating to “buy” from “hold”.


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