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European stocks make a downbeat start to second quarter

written by Bella Palmer

The continent-wide STOXX 600 ended 0.8% lower on Tuesday, sliding to a one-week low after touching an all-time intraday high

European stocks made a downbeat start to the second quarter, pressured by healthcare shares, while investors parsed inflation data from the continent's biggest economy Germany for clues on the timing of ECB interest rate cuts.

The continent-wide STOXX 600 ended 0.8% lower on Tuesday, sliding to a one-week low after touching an all-time intraday high, with investors returning after an extended weekend and the Easter holiday.

Speculation about imminent interest rate reductions has convinced investors to buy into risky assets in recent weeks, even as the benchmark index trades near record highs after notching its second consecutive quarter of gains.

But equities fell back on Tuesday, also weighed down by rising euro zone bond yields.

Preliminary data showed German inflation dropped slightly more than expected in March, helped by lower energy prices. That came a day ahead of wider euro zone inflation data.

Commerzbank Research analysts said they expected March to be a trough in German inflation and that it was set to rise again in the coming months, with the core rate stabilising above the ECB's 2% target.

Among major sectors, healthcare shed 1.6% after recent gains. Siegfried Holding lost 5.4% as the Swiss pharmaceutical company's CEO Wolfgang Wienand is set to step down to join Lonza.

Retail, real estate, and travel and leisure also decline more than 2% each.

On the flip side, energy stocks advanced 2.5%, touching a more than five-month high, as oil prices climbed on fresh threats from Ukrainian attacks on Russian energy facilities and escalating conflict in the Middle East.

Norway's oil-heavy benchmark index also added 1.5%. Equinor advanced 4% after Bernstein initiated coverage of the Norwegian stock with an "outperform" rating.

Basic resources also jumped 1.8% to hit a more than two-month high, tracking strong metal prices.


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