By Sruthi Shankar and Johann M Cherian
(Reuters) -European shares closed slightly lower on Tuesday, their third of four sessions in the red, as caution around rate cuts dominated and investors awaited economic data later in the week.
The pan-European index ended 0.2% lower after hitting a one-week low earlier in the session, with banks and luxury stocks leading the sector losses, each down about 0.9%.
Italy’s lender-heavy stock index lagged regional peers, falling 0.6% to its lowest in more than a week.
The STOXX index has fallen from record highs since European Central Bank policymakers warned against expecting successive rate cuts in June and July.
Traders expect a 66 basis point rate cut from the ECB by the end of the year, according to the LSEG interest rate odds app, the first of which was seen in June.
Eurozone negotiated first-quarter wage data, together with May manufacturing data expected on Thursday, could shed light on the state of the economy and provide clues to the trajectory of interest rates.
“Productivity in the Eurozone is weak, so most of the increase in labor costs in the first quarter most likely reflects higher worker labor costs. Increased wage pressures in the Eurozone suggest that the easing cycle will be shallow,” says Win Thin, global head of markets strategy at Brown Brothers Harriman. .
Investors will also focus on the minutes of the Fed’s latest policy meeting and Wednesday’s earnings from chip giant Nvidia (NASDAQ:) to see if the recent momentum that pushed U.S. and European stocks to record highs continues.
Data showed on Tuesday that German producer prices fell more than expected in April, mainly due to lower energy prices.
Drugmaker AstraZeneca (NASDAQ:) rose 2.2%, one of the biggest gainers in Britain’s key markets, after saying it plans to increase sales by about 75% to $80 billion by 2030.
The broader healthcare sector outperformed the main STOXX index with a rise of 0.7%.
Italy’s largest insurer Generali (BIT:) fell 1.5% after publishing first-quarter results, with some analysts pointing to lower-than-expected profitability in the property and casualty sector.
Energy contractor Saipem rose 4% after winning $3.7 billion in contracts from a subsidiary of French oil giant TotalEnergies (EPA:).
Swiss fastening systems maker SFS Group climbed 8% after UBS upgraded the shares from ‘neutral’ to ‘buy’.
