European stocks plunge as concerns over high inflation linger

European stock markets eased on Thursday as investors took advantage of gains made the day before on better-than-expected inflation data in the United States.

But while overall sentiment was positive, investors remain jittery as U.S. Federal Reserve officials seek to temper expectations of a possible end to the monetary policy tightening cycle, traders said.

Minneapolis Federal Reserve Chief Neel Kashkari warned: “We are nowhere near saying we are on the verge of declaring victory.”

And according to Chicago Federal Reserve Director Charles Evans, rates will continue to rise “for the rest of this year and into next year.”

“Investors are certainly in a more bullish mood as relief from U.S. inflation data trickles down to markets,” said OANDA analyst Craig Erlam.

However, “Fed policymakers are keen to stress that the tightening cycle is far from over and a policy reversal early next year is highly unlikely,” Erlam said.

Investors will therefore remain alert to further comments from policymakers over the coming weeks to better gauge the likely pace of further rate hikes, as strong job growth shows how resilient the economy remains in the face of rising costs. borrowing and inflation.

“Inflation has been expected to peak over the summer for some time, so it was reassuring to markets that there were clear signs that this appears to be happening,” said Oliver Blackbourn, of Janus Henderson Investors.

“However, the Fed will undoubtedly focus on signs of underlying inflation, especially in a very tight labor market.”

In the oil market, crude prices rose as US recession fears subsided, but remained around six-month lows and below levels seen before the war in Ukraine. .

– Key figures around 11:00 GMT –

London – FTSE 100: 0.4% drop to 7,479.08 points

Frankfurt – DAX: 0.1% drop to 13,686.67%

Paris – CAC 40: 0.3% down to 6,503.48%

EURO STOXX 50: DOWN 0.2% to 3,742.36

Hong Kong – Hang Seng Index: UP 2.4% to 20,082.43 (closing)

Shanghai – Composite: UP 1.6% to 3,281.67 (closing)

Tokyo – Nikkei 225: Closed for holidays

New York – Dow: UP 1.5% to 33,309.51 (closing)

Euro/dollar: UP at $1.0336 vs. $1.0299 on Wednesday

Pound/dollar: DOWN to $1.2206 from $1.2213

Euro/pound: UP at 84.69 pence against 84.29 pence

Dollar/yen: FALL to 132.59 yen against 132.89 yen

Brent from the North Sea: +0.8% to 98.16 dollars a barrel

West Texas Intermediate: UP 0.8% to $92.67 a barrel