Europe midday: Shares extend losses as EZ inflation ticks up
By Frank Prenesti
Date: Tuesday 02 Sep 2025
(Sharecast News) - European shares extended losses on Tuesday as a flash estimate showed eurozone inflation ticked above the European Central bank's 2% target for the first time since April, while bond market volatility also hampered sentiment.
The pan-regional Stoxx 600 index was down 0.95% to 546 at 1206 BST with all major bourses lower.
Eurozone picked up to 2.1% in August, statistics body Eurostat said, above expectations of no change. Food, alcohol and tobacco prices rose by 3.2%, while services inflation dipped to 3.1%. Industrial goods prices were 0.8% higher than a year ago, while energy costs were 1.9% lower on an annualised basis.
French and UK government bond yields rose as traders worried about budgetary fiscal plans in both countries. The rate on Britain's 30-year debt touched a 27-year high of 5.680% on concerns about how Finance Minister Rachel Reeves will plug a more than £20bn fiscal hole.
"European equities are under heavy pressure this morning, with the DAX down around 1% as risk sentiment sours. This follows a two-week period of weakness in European stocks, as traders grow increasingly cautious that September could once again bring profit taking and selling pressure," said Scope Markets analyst Joshua Mahony.
"Investors are finding little reason to chase stocks higher when bond markets continue to promote the need for caution. Notably, we have seen continued gains for long-term yields, with the gap between Euro 2-year yields and the 30-year rising to the highest level since the beginning of 2019."
"In part this reflects the view that while the short-term risks appear to be fading, the consistent rise in borrowing and debt means that many countries are on an unsustainable path that make long-term debt unattractive."
"The upcoming vote of no confidence in France highlights the problems faced by many nations in the West, with any efforts to try and reduce the debt burden ultimately facing a push back against any rise in taxes or spending cuts."
In equity news, Nestle shares fell after the foods giant ousted chief executive Laurent Freixe for failing to disclose a romantic relationship with a subordinate.
Kering gained 3.8% after HSBC upgraded the Gucci owner to 'buy' from 'hold'. The news lifted sector peers LVMH and Christian Dior.
Reporting by Frank Prenesti for Sharecast.com
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN