By Sudeshna Ghoshal
Sept 8 (Reuters) – European shares eased on Tuesday as firmer oil prices fuelled inflation worries and concerns that a Middle East war could disrupt supplies, while Novartis is on track for its worst day on record after reporting a second drug development setback.
The pan-European STOXX 600 was down 0.6% at 646.1 points by 0814 GMT. Germany’s DAX shed 0.6%, London’s FTSE lost 0.4% and France’s CAC 40 slipped 0.5%, following a relatively subdued session on Monday due to a U.S. public holiday.
Novartis was the top decliner in the STOXX 600, down 10.2%, after the Swiss drugmaker said late-stage testing of the del-desiran drug for myotonic dystrophy failed to meet its primary endpoint. The disappointment follows another closely watched setback announced on Monday, when its experimental cholesterol drug pelacarsen failed in a late-stage trial.
“It’s creating a level of disappointment as far as the share is concerned… but let’s not forget that they have had a solid year to date… before this latest pullback yesterday and today. We’ve had solid gains,” said Fiona Cincotta, senior market analyst at Stone-X.
Banking shares shed 1.3%, adding pressure on the main index.
“This is to do with the sort of the broad outlook for the eurozone economy and impact of higher oil prices… technically, are we looking towards a more recessionary outlook for the eurozone, which… banks tend to be the first place where we see that reflected,” said Cincotta.
Energy shares gained 0.6% as Brent crude futures traded around $98.5 per barrel after Iran threatened to retaliate against any new attacks by targeting energy infrastructure across the Gulf, including U.S. oil and gas interests. [O/R]
RISING RATE BETS IN FOCUS
Higher oil prices have reignited inflation concerns, triggering a global bond selloff last week and reinforcing expectations that central banks may need to keep policy tighter for longer.
Investors widely expect the European Central Bank to raise interest rates by 25 basis points on Thursday, while attention is also turning to U.S. inflation data due later this week. The inflation report follows a stronger-than-expected U.S. jobs reading that reinforced bets on another Federal Reserve rate hike this month.
Among individual movers, Sandoz added 4.5% after the Swiss pharma firm said it aims to more than double net sales from 2025 to 2035.
Poste Italiane sweetened its takeover offer for Telecom Italia as the state-controlled company seeks to secure control of Italy’s former phone monopoly. Shares of Poste were flat, while Telecom Italia was up 2.5%.
(Reporting by Sudeshna Ghoshal in Bengaluru; Editing by Sonia Cheema and Sherry Jacob-Phillips)
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