Stocks slip across Europe as oil climbs to $100

European stock markets weakened again on Thursday, with a new wave of nervousness over oil prices appearing to be the main reason. The benchmark STOXX 600 index fell by 0.5 per cent, marking its seventh decline in nine trading days.

Markets were unsettled after oil returned to $100 per barrel following reports of an apparent attack by Iranian ships on two tankers in Iraqi waters. Investors fear that if energy prices remain high for longer, Europe will face stronger inflationary pressure and even weaker growth.

This is also reflected in market expectations. Money markets are already counting on another ECB rate rise by July and a high probability of another move by the end of the year.

Banks recorded the biggest losses, while defensive companies benefited from ongoing geopolitical tensions. BMW weakened after issuing a weaker earnings outlook, while Daimler Truck strengthened slightly after a relatively stable margin forecast.

(reuters, pir)