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11 May 2021 | 17:17

Europe close: Stocks down amid inflation worries, Travel and Leisure hardest hit

(Sharecast News) - European shares fell back on Tuesday, tracking continued selling on Wall Street amid concern over rising US inflation and what some analysts said was fairly indiscriminate selling. The pan-European Stoxx 600 index finished down 1.97% at 436.61, alongside a 1.82% drop for Germany's Dax to 15,119.75.

Italy's FTSE Mibtel meanwhile fell 1.64% to 24,396.01.

The Stoxx 600 sector gauge for Travel and Leisure names plummeted 5.73%, with some traders noting that even high-flying Basic Resources shares were also caught in the downdraft, with that sector index down 1.52%.

"The market just can't shake the inflation fears which are clouding the recovery from Covid," said AJ Bell investment director Russ Mould.

"Surging commodity prices are acting as a canary in the coal mine for inflation - with the huge infrastructure and stimulus packages in the US a key contributing factor. The valuations of the tech-based growth companies in the US are harder to justify in an inflationary and rising interest rate environment - where lower risk assets typically offer higher returns."

In the background, the yield on the benchmark 10-year Bund was five basis points higher at -0.16%.

Stateside, analysts were watching five-year inflation breakevens on US Treasuries, which at 2.71% were already at multi-year highs.

In other equity news, Sweden's Evolution Gaming Group led the fallers, down 14% after the bookrunner announced the pricing of block trades.

UK bank NatWest slipped after the government kicked off the sale of a further stake in the bank.

Supermarket Morrisons shares initially bucked the trend as it reported a rise in first-quarter sales and reiterated guidance for higher full-year profits and reduced debt as the economy rebounded from the Covid-19 pandemic - but later fell back.
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