FTSE 100 down 0.42%; DAX down 1.35%; CAC 40 down 0.89% (Il Sole 24 Ore Radiocor) - Milan, 02 Jul - European shares were lower at mid-session, retreating from yesterday's gains, with the Stoxx 600 index down 0.76%.

Caution prevailed as investors assessed the latest regional inflation data, with eurozone headline dropping slightly, in line with expectations, after an uptick in May, while the closely-watched core and services prints held steady, coming in slightly higher that expected.

At 1135 GMT, the London FTSE 100 was down 0.42% at 8,132 points, the Frankfurt DAX was down 1.35% at 18,074 points, the Paris CAC 40 down 0.89% at 7,493 points, while in Milan the FTSE MIB was down 1.18% at 33,320 points, and in Madrid the IBEX 35 was down 1.79% at 10,859 points.

The annual inflation rate in the eurozone is expected to fall to 2.5% in June 2024 from 2.6% the previous month, according to a flash estimate from European Union statistical office Eurostat.

Looking at the main components of euro area inflation, services are expected to have the highest annual rate in June (4.1%, stable compared with May), followed by food, alcohol & tobacco (2.5%, compared with 2.6% in May), non-energy industrial goods (0.7%, stable compared with May) and energy (0.2%, compared with 0.3% in May).

The European Central Bank started slashing interest rates in June but made no commitment about further moves as inflation remains sticky.

Investors also awaited a speech by Federal Reserve chair Jerome Powell at a European Central Bank event today.

The minutes of the Fed's June meeting are due tomorrow, while key US labor market data is also on tap this week with nonfarm payrolls due on Friday.

The region's stock markets rose in the previous session as investors dismissed recent concerns over political uncertainty in France following this weekend's elections.

Marine Le Pen's far-right National Rally (Rassemblement National) party scored historic gains in the first round of parliamentary election, but by a smaller margin than what some polls had suggested.

According to updated figures released today by France's Interior Ministry, the Rassemblement National and allies won 33% of the vote, followed by there leftist New Popular Front (Nouveau Front Populaire) bloc with 28%, and president Emmanuel Macron's centrists trailing behind in third place with 20%.

The projections suggest that no one party has won an outright majority of at least 289 seats, pointing to a hung parliament.

The focus now shifts to next Sunday's runoff, which will be preceded by intense weeklong negotiations between the parties on how to join forces in each of France's 577 constituencies as the Rassemblement National is seen struggling for an absolute majority.

Both the far-right and the left-wing alliance have pledged big spending increases, sparking concerns over clashes with the EU as the country already struggles with high budget deficit, recently prompting the EU to recommend disciplinary steps.

President Emmanuel Macron called for a snap legislative vote in a political gamble after a crushing defeat for his party in the European Parliament elections.

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(RADIOCOR) 02-07-24 13:42:55 (0400) 5 NNNN