European stocks close lower on inflation fears but post seventh straight month of gains
- European stocks closed lower on Tuesday with traders digesting hotter-than-expected inflation data.
- The pan-European Stoxx 600 index was down 0.5% by the close but posted its seventh straight month of gains.
- Shares of Belgium-based biotech company Galapagos rose 7% after it said its CEO would step down.
LONDON — European stocks closed lower on Tuesday, as investors digested the latest economic data from the region and beyond.
The pan-European Stoxx 600 index closed down 0.5% provisionally. However, the index was up over 1% month-on-month, marking its seventh consecutive month of gains. That's despite August typically being a quieter month for trading given the summer vacation period.
Markets turned lower on Tuesday following the release of euro zone inflation data for August which showed consumer prices increased by 3% this month from a year ago, according to preliminary estimates, far above expectations and the European Central Bank's 2% target. The data will put pressure on the central bank to address inflation concerns at a key meeting next week.
Looking at individual stocks, Belgium-based biotech company Galapagos, its share price rising 7% after it said its CEO would step down.
Shares of British pharmaceutical firm GSK slipped over 1% after the company and SK Bioscience said they have begun a late-stage trial of their Covid-19 vaccine candidate.
Meanwhile, British business supplies distributor Bunzl was down 1.6% after it said it was facing supply chain challenges and labor and materials shortages in some markets as it presented its earnings from the first half of the year.
The pessimistic trade for European markets comes after data released on Monday showed euro zone economic sentiment eased more than expected in August, from a record high in July.
Investors are also digesting the latest data out of China that showed slowing Chinese factory activity growth in August.
China's factory activity grew at a slower pace in August as compared with the previous month, data released Tuesday showed. The official manufacturing Purchasing Managers' Index for August came in at 50.1, against July's reading of 50.4. PMI readings above 50 represent expansion, while those below that level signal contraction.
On Wall Street, U.S. stocks were mixed Tuesday. However, the S&P 500 was on track to wrap up its seventh straight month of gains.
Tuesday marks the last trading day of August. Investors are awaiting a key jobs report on Friday ahead of the Labor Day weekend. Economists polled by Dow Jones expect 750,000 jobs were created in August and the unemployment rate fell to 5.2%.
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- CNBC's Ryan Browne, Silvia Amaro and Yun Li contributed to this report.