European stocks started the month of September sharply lower, falling to their lowest levels in 7 weeks due to increasing concerns regarding economic growth, sharp increases in interest rates and record inflation rates.
The pan-European Stoxx 600 index fell 1.8%, with shares of all sectors declining, to close the index lower for the fifth consecutive day.
Manufacturing activity in the euro zone contracted for a second month in August, according to a survey that showed that weak demand made factories unable to sell what they produced and thus stockpiled goods at a record pace.
This came following data released on Wednesday revealed that inflation in the bloc hit another record level last month.
Eurozone financial markets expect an 80% chance of the European Central Bank raising interest rates by 75 basis points at its meeting next week, compared to just over 50% before Wednesday’s data.
Shares of the mining sector exposed to China fell 3.8% to lead European losses with the decline in metal prices, while luxury goods stocks came under pressure, and LVMH, owner of Louis Vuitton, Hermes and Burberry, fell between 2.2% and 2.5%.
German Lufthansa shares fell 3.1% following the pilots’ union announced yesterday a strike scheduled to start tomorrow, Friday, following the two parties failed to reach an agreement on wages.
Data showed German retail sales unexpectedly rose 1.9% in July, as the online retail sales and food sectors showed a recovery.