The major European markets closed Tuesday's session in negative territory, penalized by rising oil prices and inflation data in China above expectations, in a day also marked by the escalation of sovereign debt yields, on the eve of the European Central Bank's monetary policy meeting. The French CAC 40 was the most penalized index, falling 1.94%, followed by the German DAX, which retreated 1.66%. The British FTSE 100 lost 1.31% and the Spanish IBEX 35 fell 1.51%. The Euro Stoxx 50 lost 1.58% and the Stoxx 600 fell 1.41%.
In Lisbon, the PSI 20 closed at 9,445.17 points, a decline of 0.38%, having resisted steeper losses thanks to the performance of Galp Energia, which added 1.42% to 21.39 euros, benefiting from the rise in oil. The vast majority of other shares closed in decline, with Mota-Engil retreating 3.37%, CTT falling 2.03% and BCP dropping 0.64%. On the positive side, besides Galp, the highlights were Navigator and Altri.
Investors showed concern over the rise in oil prices, which in London again traded above 100 dollars per barrel. Brent crude closed at 101.34 dollars, a rise of 3.49%, while New York WTI gained 3.57%, to 96.35 dollars. Together with the revelation of an above-expected rise in producer prices in China, the environment fueled fears that new inflationary pressures could lead to greater interest rate hikes by central banks.
Sovereign debt yields again rose across the board in Europe. Germany's ten-year rate rose to 3.44%, while the UK equivalent advanced to 5.26%. Among the peripherals, highlights for the rises in Italy, Greece and France, with Portugal's ten-year yield closing at 3.79%. Market analysts at BCP and MTrader summarized the day's sentiment, noting that concerns about inflation brought down European stock exchanges on the eve of the ECB's monetary policy communications.
