By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets moved lower on
Tuesday as investors stayed cautious ahead of inflation data for
the euro zone that could add more pressure on the European Central
Bank to cut rates.
The Stoxx Europe 600 index slipped 0.1% to 344.66 after posting
a 0.2% advance on Monday.
Food and drinks makers added pressure on the benchmark after a
round of ratings changes from Goldman Sachs. Shares of Davide
Campari-Milano SpA dropped 2%, Heineken NV (HINKY) fell 1.3% and
Danone SA gave up 0.9% after all three companies were cut to sell
from neutral.
On a more upbeat note, shares of Wolseley PLC climbed 2.9% after
the distributor of heating and plumbing products reported strong
growth in the U.S. and the Nordics during the third quarter.
More broadly, the release of inflation figures for the euro zone
is the main event on the data calendar on Tuesday. Economists at
Danske Bank said in a note that they have revised their forecast
for May inflation down to 0.5%, from an initial prediction of
0.66%, after German consumer prices missed expectations on
Monday.
The weak inflation rate in the euro zone has spurred calls for
the ECB to loosen monetary policy, and most economists expect the
central bank to cut interest rates at its meeting on Thursday.
"It seems more or less like a done deal that the ECB will ease
on Thursday, but the lower-than-expected inflation adds additional
pressure and it is more likely that [the ECB] will surprise the
markets," the Danske Bank economists said.
They expect the ECB to take the deposit rate into negative
territory for the first ever, while at the same time boosting
liquidity through a new round of long-term refinancing operations,
also known as "LTRO".
The inflation data come out at 10 a.m. London time, or 5 a.m.
Eastern Time. At the same time, euro-zone unemployment figures for
April will be released.
Ahead of the data, Germany's DAX 30 index slipped 0.1% to
9,944.93, while France's CAC 40 index gave up 0.1% to 4,513.36. The
U.K.'s FTSE 100 index lost 0.2% to 6,852.93.
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