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European Shares Face Worst Quarter since Early 2020

  • Stoxx 600 down 10.6% for this quarter
  • All eyes on euro zone inflation data on Friday
  • Uniper hits bottom of STOXX after outlook withdrawal

June 30 (Reuters) - European shares on Thursday looked set for their worst quarter since the pandemic-led carnage in early 2020, as investors became increasingly wary of a global recession in the wake of hawkish central bank actions to tame rapid inflation.

The continent-wide STOXX 600 index dropped 1.3%, setting it up for quarterly losses of more than 10%.

France's CAC 40 index slid 1.8% as preliminary official figures showed inflation climbed further from the previous month to a record 6.5%.

"What we're seeing at the moment is more evidence that inflation is serious, entrenched and investors are having to now reappraise the valuations they are putting on equities," said Azad Zangana­, senior European economist and strategist at Schroders.

"Now for a little while, the attitude in Europe was well a lot of the inflation is external. That's changing now and over the next few months, the European Central Bank will have to step up its efforts to curb inflation over the next few years."

The STOXX 600 fell for a second straight day after global central bank chiefs said bringing down high inflation around the world will be painful and could even crash growth.

All eyes are now on the first estimate of June inflation for the euro zone due on Friday, which the ECB should scrutinize ahead of its July 21 policy meeting where it promised to hike rates for the first time since 2011.

The STOXX 600 has shed more than 16% this year so far, as a cocktail of worries from soaring inflation to China's slowing economy and Russia's invasion of Ukraine dampen risk appetite.

All European sector indexes fell on Thursday, with technology and automobiles down 2.1% and 2.3%, respectively.

Among single stocks, Uniper SE tumbled 16.1% after the German utility withdrew its outlook for the 2022 financial year due to gas supply restrictions from Gazprom.

Shares of its Finnish parent Fortum dropped 5%.

Electrode maker Industrie De Nora slipped 3.1% on its debut on Italy's main market.

BioNTech rose 2.7% after the German drugmaker along with Pfizer signed a $3.2 billion deal with the U.S. government for the delivery of 105 million doses of their COVID-19 vaccine.

Saab gained 5.4% after the defence materials group won an order from the Swedish Defence Material Administration for its GlobalEye Airborne Early Warning and Control aircraft. 

Virgin Money added 3.2% after the British bank said it would buy back shares with an initial repurchase of up to 75 million pounds ($91.10 million).

Reporting by Devik Jain in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips

Source: Reuters

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