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European shares snap three-day winning streak on commodities' drag

Tue, 04th Jun 2024 17:16

Energy shares hit over two-month lows, biggest drag


German unemployment rises more-than-expected


STOXX 600 closes 0.5% lower

June 4 (Reuters) - European shares slipped on Tuesday as falling commodity prices weighed on mining and energy stocks, though caution remained ahead of European Central Bank's interest rate decision later this week.

The continent-wide STOXX 600 closed 0.5% lower, snapping a three-day winning streak.

Energy stocks led losses with a 2.6% drop, hitting an over a two-month low, tracking a more than 1% fall in oil prices on scepticism about an OPEC+ decision to boost supply later this year into a global market where demand has already shown signs of weakness.

"(Low crude prices), and the weaker economic data seen both sides of the (Atlantic) may provide some comfort for those on rate-setting committees hoping for an earlier cut to borrowing costs," said Derren Nathan, head of equity research at Hargreaves Lansdown.

Basic Resources, which houses Europe's biggest mining firms, dipped 2.3% amid declining prices of metals like gold and copper.

A risk-off mood also set in as market participants awaited the ECB's rate verdict on Thursday, where it is expected to ease borrowing costs by 25 basis points.

The recent uptick in the euro zone inflation data, however, has cast doubt on further monetary easing prospects this year.

Most bourses swung to losses on the continent, with France's CAC 40 down 0.8%, while London's FTSE 100 and Germany's DAX 40 shed 0.4% and 1%, respectively.

On the data front, the number of people out of work in Germany rose more than expected in May, while Swiss inflation was steady in May, raising market expectations the Swiss National Bank (SNB) will cut interest rates again later this month.

Wall Street also edged lower as latest labour market data exacerbated worries about growing weakness in the world's largest economy.

Among individual stocks, British oil giant BP fell 3.8% after ratings agency S&P Global revised the company's credit outlook lower.

Allianz slid 3.3% after Citigroup downgraded the German insurer to "neutral" from "buy".

Mobile retailer and service provider Freenet gained 3.6% after UBS upgraded its rating to "buy" from "hold".

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