BRUSSELS (dpa-AFX) - French stocks drifted lower on Tuesday as rising tensions in the Middle East pushed up oil prices, triggering inflation and interest rate concerns. Higher bond yields and data showing an acceleration in Eurozone inflation weighed as well on sentiment.
The yield on France's 30-year yield touched its highest level since 2008 as traders assessed Middle East tensions and awaited key U.S. labor market data this week for additional clues on the Federal Reserve's rate trajectory.
Brent crude futures climbed to $92.55 a barrel today, gaining about 2.3%, amid rising Middle East tensions. According to reports, Iran retaliated with attacks on the UAE and Jordan after U.S. forces targeted an island in the Strait of Hormuz.
The European Central Bank (ECB), which is scheduled to meet next week, is likely raise its key interest rates by 25 basis points.
The benchmark CAC 40, which dropped to 8,290.35, recovered slightly and was at 8,315.53 a little while ago, down 18.97 points or 0.22% from previous close.
Renault eased by about 3.2%. Saint Gobain, Stellantis, Pernod Ricard and Kering lost 2.4%-2.7%.
Thales, Hermes International, Accor, ArcelorMittal, Safran, Airbus, Euronext and Schneider Electric fell 1%-2%. Orange, LVMH, Michelin and BNP Paribas also showed weakness.
Air Liquide moved up nearly 3%. TotalEnergies gained 1.5% as oil prices climbed higher. Carrefour, AXA, Dassault Systemes and EssilorLuxottica posted modest gains.
Data from S&P Global showed the S&P Global France Manufacturing PMI rose to 51.1 in August from 51.5 in the preliminary estimate and 49.8 in July, signaling renewed growth in factory activity.
Eurozone inflation accelerated to the highest level in nearly three years in August, reinforcing expectations for an interest rate hike at the European Central Bank's meeting next week. Inflation advanced to 3.3% in August, as expected, from 2.9 % in July, flash data from Eurostat revealed. The rate was the highest since September 2023, when inflation was 4.4%.
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