Europe close: Shares little changed as investors mull higher inflation globally

Stocks across the Continent were little changed by the end of trading on Wednesday despite ongoing concerns around the increasing in cases of the Covid-19 Delta variant while a rise in UK and US inflation stoked fears of higher interest rates.

The pan-European Stoxx 600 index slipped just 0.09% to 460.56, although the UK’s export-heavy FTSE 100 was 0.47% lower at 7,091.19 as the pound gained in the wake of data showing that June inflation jumped further above the Bank of England’s 2% target.

Germany's Dax and France's Cac-40 meanwhile were essentially flat by the close of trading.

US and Asia markets had slipped the day before following data showing US consumer price inflation was also higher than expected in June, stoking fears of a faster pace of interest rates among some.

IG market analyst Joshua Mahony said the FTSE was on the back foot as rising inflation and reopening fears drive selling pressure, although the prospect of a more hawkish Bank of England helped to lift UK-listed banks.

"Airlines, cinemas, restaurants, and alike are all under heavy selling pressure as investors consider the potential ramifications of another major surge in hospitalisations. The UK has gone from having the lowest cases per 100,000 in Europe, to the worst in just six weeks," he said.

"Thus, while there is hope that the UK vaccination efforts will stop the rise in hospitalisations at a manageable level, there is a very tangible risk that Monday’s reopening leads to a third wave of cases and another bout of restrictions.

"From an international perspective, the hope is that proof of vaccinations and testing will allow travel, yet airlines are likely to remain under pressure given the rising likeliness that the UK is consigned to the red list for many major tourist destinations."

Travel stocks all suffered as investors fretted about the rising number of Delta variant cases, threatening the economic recovery. TUI, easyJet, Wizz Air and British Airways owner IAG were all fell.

Shares in travel food outlet operator SSP Group dropped 4% as chief executive Simon Smith said he was leaving.

Avanza Bank slumped to the bottom of the Stoxx, down 9% as the Swedish bank reported a fall in second quarter profits.

On the other side of the ledger, Swedish telecoms operator Tele2 gained 6% after it reported a rise of 8% in quarterly core earnings, helped by cost savings and less headwinds related to the pandemic.

German fashion house Hugo Boss dipped after it forecast its revenues would grow by 30% to 35% this year.

Adevinta shares were up as US e-commerce giant eBay agreed to sell its stake in the Norwegian firm to private equity crowd Permira for $2.25bn, clearing a path for the two firms to merge their classifieds divisions.