European Stocks Edge Lower as Rising UK Inflation Raises Prospects of Rate Hike in Britain

European Stocks Edge Lower as Rising UK Inflation Raises Prospects of Rate Hike in Britain

European equity benchmarks were struggling for direction on Tuesday morning after a jump in the UK’s inflation rate prompted speculation that the Bank of England may raise interest rates at its next meeting in November and as car-manufacturers shifted into reverse.

Britain’s consumer price index ( CPI ) posted annual growth of 3% in September, up from 2.9% in August, according to data published by the Office for National Statistics. The increase in consumer prices is broadly expected to influence discussions at the Bank of England ahead of of its next monetary policy decision. Rising inflation, which has been a key theme since Britain’s surprise referendum decision to leave the European Union (EU) last June, is generally expected to heighten the probability of a rate hike.

In the Eurozone, the rate of annual inflation was up by 1.5% in September, unchanged from August, according to Eurostat, the statistical office of the EU. The lowest annual rates were registered in Cyprus, up by 0.1%, Ireland, up by 0.2% and Finland, 0.8% higher. The highest annual rates were recorded in Lithuania, 4.6% higher, Estonia, up by 3.9% and Latvia, 3.0% higher. Compared with August 2017, annual inflation rose in eleven member states, remained stable in seven and fell in nine.

In equities, shares in Merlin Entertainments were 20% lower, leading the decliners on London’s FTSE 100 Index, after the company forecast approximately flat group like-for-like revenue growth for 2017 after saying that trading in recent weeks had remained mixed. Mediclinic International, a private healthcare provider, was down by 3.4% and Standard Life Aberdeen, an investment company, was down by 2.7%. NMC Health, a private healthcare services provider in the United Arab Emirates, was 2.0% lower.

On Frankfurt’s DAX, car manufacturer BMW was 1.1% lower, Bayer, a life science company, was down by 0.9% and Merck, a pharmaceutical company, was also 0.9% lower. Deutsche Post was down by 0.5%. And, on Paris’ CAC-40, oilfield services provider TechnipFMC was 1.4% lower, LafargeHolcim, a maker of cement, was down by 1.3% and Essilor, an ophthalmic optics company, was 0.9% lower. Car manufacturer Peugeot was also 0.9% lower.

The pan-European Stoxx 600 Index was 0.08% lower, London’s FTSE 100 Index was down by 0.15%, Frankfurt’s DAX was down by 0.20% and Paris’ CAC-40 was 0.19% lower at the time of writing.

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