March 26 (Reuters) – European shares slipped on Thursday as investors grappled with the prospect of an imminent rate hike by the European Central Bank and dimming hopes for a quick end to the Middle East conflict.
The pan-European STOXX 600 was down 0.6% at 583.8 points by 0809 GMT, and was on track to break a three-day winning streak.
Policymaker Joachim Nagel told Reuters that the ECB has “an option” to raise interest rates at its April meeting, a day after President Christine Lagarde said that the central bank was prepared to act at any meeting to keep inflation at its 2% target.
Short-term European bond yields, a reflection of interest rate expectations, rose and pressured equities, while interest rate futures reflect a more than 68% chance of a rate hike in April, according to LSEG-compiled data.
Uncertainty about a resolution to the month-long conflict prevails following contradictory remarks by U.S. President Donald Trump and Iran.
Elevated crude prices, pressured travel stocks that fell 0.9%, while growth concerns hit industrials and banks – down 0.9% and 1%, respectively.
The spotlight was also on retail stocks following earnings from H&M and Next.
The Swedish fashion retailer slipped 4.8% as quarterly sales missed expectations, while Next added 5.5% after slightly raising its annual profit guidance.
(Reporting by Avinash P in Bengaluru; Editing by Sonia Cheema)
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