Europe open: Shares slump despite weaker US inflation data

(Sharecast News) - European shares opened sharply lower on Thursday despite a weaker-than-expected US inflation readout that dampened expectations of another rate hike from the Federal Reserve.

The pan-regional Stoxx 600 index was 0.90% lower to 629 at 0717 GMT with all major markets lower.

August's personal consumption expenditures price index - the Fed's preferred measure of inflation - rose a seasonally adjusted 0.3% month on month and 3.4% annually against forecasts of 0.3% and 3.7% respectively.

July's reading was also revised downwards, reducing bets on a Fed rate hike this month. However, analysts noted that the data was old and did not reflect September's surge in diesel prices.

US President Donald Trump's failure to extricate America from of his war of choice on Iran, in turn creating inflationary pressure, also weighed on sentiment.

"While the chances of a hike have reduced to 37%, the bond market is signalling that further rises are nonetheless on the way," said Interactive Investor head of markets Richard Hunter.

Reporting by Frank Prenesti for Sharecast.com