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European Shares Hold Steady Amid Sectoral Contrasts

European markets experienced a muted session on Wednesday, with gains in mining and travel sectors offsetting losses in healthcare and technology stocks, while UK shares faced pressure following inflation data release.

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The pan-European STOXX 600 maintained stability at 514.67 points by 0831 GMT, as healthcare stocks dipped by 0.3% and technology shares declined 0.4%, weighing on overall performance.

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In the UK, the FTSE 100 retreated by 0.2% after reports indicated that British inflation reached its 2% target in May for the first time in nearly three years. However, underlying price pressures remained robust, suggesting a cautious approach from the Bank of England regarding interest rate cuts.

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Shaun Port, managing director at Chase UK, remarked, “Services inflation remains high, keeping core CPI slow to decline despite headline inflation easing, possibly rising again later in the year.”

Attention now turns to upcoming interest rate decisions by central banks in England, Norway, and Switzerland later this week.

Last week, European shares encountered significant declines after French President Emmanuel Macron called for snap elections following a setback for his ruling party in the European Parliament. Recent polls indicate a lead for Marine Le Pen’s far-right National Rally party in the first round of the parliamentary elections.

Janet Mui, head of market analysis at RBC Brewin Dolphin, noted, “She (Le Pen) recognizes the need for market and investor support, advocating for less fiscal strain and a business-friendly approach.

Offsetting sectoral losses, travel and leisure stocks advanced by 0.7%, boosted by Accor’s 2.7% rise following an upgrade by Barclays to “overweight.”

Basic resources also gained 0.8% on the back of a rebound in metal prices, while oil and gas heavyweights edged up by 0.3%.

In individual stocks, SMA Solar Technology AG plunged 30.5% after revising down its profit outlook, citing political uncertainties. Meanwhile, Spectris dropped 9% after forecasting annual adjusted operating profit at or slightly below market expectations.

On a positive note, Umicore surged 4.2% after J.P. Morgan upgraded the Belgian metal recycling firm to “overweight.”

With U.S. markets closed for a public holiday, trading activity in European markets was expected to be subdued.

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