Europe close: Stocks end February on a mixed note

European stocks finished the month of February on a mixed note following the release of stronger-than-expected readings on inflation out of France and Spain, raising expectations of further rate hikes from the European Central Bank.

"While the eurozone continues to exhibit a range of inflation trajectories, the fact that France and Spain have both struggled to move below the 6% mark is worrying given that US CPI appears to have similarly hit friction at 6.4%," said IG senior market analyst Josh Mahony.

"What this means in effect is that hopes of a swift return towards target in North America and Europe are being eroded to the detriment of equity markets."

The benchmark Stoxx Europe 600 index drifted lower by 0.32% to 461.11, while France’s CAC 40 slipped 0.38% to 7,267.93.

Spain's Ibex 35 however added 0.86% to 9,394.60.

In parallel, the yield on the benchmark 10-year German Bund was up by seven basis points to 2.649%.

Investors were still scrutinising the latest version of the UK-European Union trade deal covering Northern Ireland.

UK Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen on Monday unveiled a deal on post-Brexit trade arrangements for Northern Ireland - a source of huge tension over the only British territory that has a land border with the 27-nation bloc.

Closer to home, preliminary figures out earlier showed that French and Spanish inflation picked up in February, putting more pressure on the ECB to hike rates.

Headline inflation in France ticked up to 6.2% year-over-year from 6% in January, coming in above consensus expectations of 6.1%. Meanwhile, the harmonised index came in at 7.2% in February, up from 7% the month before and above consensus expectations for no change. The jump mostly reflects higher food and services inflation.

ING economist Charlotte de Montpellier said the data indicate that French inflation has still not peaked.

Meanwhile, in Spain, the headline inflation rate rose to 6.1% from 5.9% in January, with harmonised inflation coming in the same. Economists had been expecting a decline to 5.5%.

In equity markets, Germany’s Bayer slumped after warning that profits will be lower this year.

Elsewhere, online supermarket Ocado plunged as annual losses widened due to a profit wipeout at its retail unit, run jointly with Marks & Spencer.

Building materials supplier Travis Perkins fell as a tough housing market sent profits lower.