Volkswacht Bodensee - European and US stocks slide on inflation worries

News that UK inflation has spiked to a 40-year peak of nine percent in April helped push London stocks 0.4 percent lower in afternoon trading.

The figure also sent the pound sliding on worries that the cost-of-living crisis will spark a recession in Britain, in line with the Bank of England's recent forecast.

In the eurozone, Frankfurt shed 0.6 percent and Paris 0.8 percent in value.

On Wall Street, all three major stock indices opened lower on worries high inflation will erode corporate earnings.

- Recession 'increasingly inevitable' -

"A recession is looking increasingly inevitable in the UK and other countries... if the inflation data does not improve," OANDA analyst Craig Erlam told AFP.

"That does not bode well for equity markets."

The technical definition of a recession is two quarters of economic contraction in a row.

Investors remain on red alert over decades-high inflation, which has surged around the world as Russia's invasion of Ukraine fuels spiking energy and food prices.

That in turn has sparked interest rate hikes from major central banks including the Bank of England and the US Federal Reserve, as they seek to contain runaway prices.

Concerns that companies will have trouble were raised by the latest earnings from US retailer Target, which saw its profits fail to meet analyst expectations despite higher-than-expected sales.

Target's "report is a stark example of the profit margin pressures most companies are facing due to high inflation and it has stoked concerns about being stuck in a stagflation environment," said market analyst Patrick O'Hare at Briefing.com.

Stagflation is when an economy experiences high inflation and little or no growth.

Target's shares plunged by more than a quarter as trading got underway on Wall Street.

Asian equities traded mixed on Wednesday, despite strong Wall Street gains after brisk US retail sales data, although strong data is likely to invite further interest rate hikes by the Federal Reserve.

The Fed's monetary policy tightening has sent jolts through markets this year, deepening the apprehension of investors already roiled by China's Covid-19 lockdowns and Russia's invasion of Ukraine.

Despite recession concerns, oil prices pushed higher.

"Oil prices are on the rise again as Shanghai takes a big step towards reopening following three days of no new cases in the broader community," said OANDA'S Erlam.

- Key figures at around 1330 GMT -

London - FTSE 100: DOWN 0.4 percent at 7,485.25 points

Frankfurt - DAX: DOWN 0.6 percent at 14,095.25

Paris - CAC 40: DOWN 0.8 percent at 6,380.63

EURO STOXX 50: DOWN 0.7 percent at 3,616.00

New York - Dow: DOWN 0.9 percent at 32,368.19

Hong Kong - Hang Seng Index: UP 0.2 percent at 20,644.28 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,085.98 (close)

Tokyo - Nikkei 225: UP 0.9 percent at 26,911.20 (close)

Brent North Sea crude: UP 1.0 percent at $113.07 per barrel

West Texas Intermediate: UP 1.4 percent at $113.97 per barrel

Euro/dollar: DOWN at $1.0520 from $1.0550 at 2100 GMT Tuesday

Pound/dollar: DOWN at $1.2407 from $1.2493

Euro/pound: UP at 84.79 pence from 84.45 pence

Dollar/yen: DOWN at 128.74 yen from 129.38 yen

burs-rl/lth

F.Müller--BTB