Europe midday: Stocks continue retreat from two-month high

(Sharecast News) - European stocks continued to pull back from a two-month high on Tuesday as nerves kicked in ahead of some key inflation figures from the eurozone and US later in the week. Analyst Joshua Mahony from Scope Markets said markets were weaker as "investors take stock of what has been another strong month of gains, with these being realised despite the mounting macroeconomic headwinds".

The Stoxx 600 was down 0.6% at 455.82 by 1219 GMT, falling for the second straight day after finishing Friday's session at 459.98, its highest close since 20 September. Even including this week's declines, the index has gained 5.1% for the month of November.

"Markets are going through a one step forward, one step back motion at present, struggling to sustain a proper breakout despite investors increasingly taking the view that central banks are done with raising interest rates in the current cycle," says Russ Mould, investment director at AJ Bell.

Eyes turn to inflation stats

Economic data was relatively thin on the ground on Tuesday, with eyes starting to turn towards consumer price index (CPI) numbers from the eurozone and US on Thursday.

The annual rate of CPI growth in the eurozone is expected to have fallen to 2.7% in November from 2.9% in October, with the core rate easing to 3.9% from 4.2%. Meanwhile, the Federal Reserve's preferred measure of inflation, the personal consumption expenditures (PCE) price index is forecast to have slowed to an annual rate of 3% in October from 3.4% in September, with the core rate slipping to 3.5% from 3.7%.

"The problem is that representatives of major central banks don't want to draw a definitive line in the sand. We keep getting little comments that suggest their work to tame inflation is not finished," Mould said, citing comments from European Central Bank president Christine Lagarde from Monday.

In a meeting of EU lawmakers, Lagarde said now was "not the time to start declaring victory" on inflation and that there was still "considerable uncertainty" in the medium-term outlook.

"Every time we get such comments, investors lose confidence and equities take a small step back," Mould said.

Argenx and Ubisoft tank

Dutch biotech group Argenx saw shares drop over 10% after results from a study of its bleeding disorder drug showed weak results.

French videogame publisher Ubisoft also dropped 9% after the placement of bonds convertible or exchangeable for new or existing shares.

UK-listed engineering group Rolls-Royce was a high riser, jumping 7% after unveiling its mid-term financial targets for 2027 and beyond, forecasting an operating profit within the range of £2.5bn to £2.8bn, and an operating margin of 13% to 15%.

HSBC cut its price target on Burberry, saying that the luxury group's recent profit warning was "not reassuring" causing the stock to fall.