Europe close: Shares slip ahead of US CPI data

European shares were lower on Tuesday as investors took some money off the table ahead of key US consumer price inflation data due out the next day.

The pan-European Stoxx 600 index fell 0.67%, after making gains on Monday.

Britain’s FTSE 100 was just above the flatline after data showed retail sales rose 1.6% in July, buoyed by a heatwave and sales of hot-weather clothing, picnic items and electric fans, according to a report from the British Retail Consortium.

Germany's Dax on the other hand gave back 1.12% to 13,534.97, while the FTSE Mib dropped 1.05% to 22,488.49.

"US markets have dented confidence this afternoon, with the FTSE 100 providing the one area of strength in an otherwise tumultuous day for equities," said IG senior market analyst Josh Mahony.

"The fears around another potential inflation-fuelled selloff in high multiple stocks has dented the likes of the Nasdaq in particular, with the recent earnings-based optimism starting to wane ahead of tomorrows crucial US inflation release."

Investors were looking for clues on the potential pace and size of future interest rate rises by the US Federal Reserve.

An unexpectedly strong US jobs report published during the previous week cut the likelihood of a recession, but stoked fears the central bank would opt for more aggressive rate hikes as it looks to rein in inflation.

In equity news, workspace company IWG plunged 11% after first-half earnings. The firm narrowed first-half losses amid strong demand for hybrid working.

In the six months to 30 June, adjusted pre-tax losses narrowed to £70.2m from £163.3m in the same period a year earlier, with system-wide revenues up 22.3% at £1.4bn. IWG said this was driven by strong demand for hybrid working.

Swiss duty-free retailer Dufry rose 4.1% as it said it saw strong sales momentum continue in July despite the soaring inflation.

Asset manager Abrdn slumped after it posted a drop in first-half profit and revenue and struck a cautious note on the outlook. Adjusted pre-tax profit fell to £99m from £163m in the same period a year ago, while adjusted operating profit slid 28% to £115m and fee-based revenues were down 8% to £696m. Abrdn said this was driven by market movements.

On an IFRS basis, the company swung to a pre-tax loss of £320m from a profit of £113m.

Legal & General dipped even as the insurer reported a rise in interim operating profits, driven by higher interest rates and a strong annuity portfolio performance.