Europe midday: Shares slip into red as UK govt hikes taxes, slashes spending

European shares slipped into the red at midday on Thursday as revised eurozone inflation figures were published and the UK government lifted taxes and cut public spending to placate bond traders.

The pan-European Stoxx 600 index was down 0.54% at 1225 GMT, with all major markets lower.

Eurozone inflation was a touch lower than initially estimated in October but still at a record high amid surging energy prices, according to figures released on Thursday by Eurostat.

The annual inflation rate was 10.6%, up from 9.9% in September, but 0.1 percentage point lower than initially estimated.

Energy inflation rose to 41.5% in October from 40.7% in September. This was slightly below the initial estimate of 41.9%. Meanwhile, food, alcohol and tobacco inflation increased to 13.1% from 11.8%.

The lowest annual inflation rates were seen in France, at 7.1%, Spain, at 7.3% and Malta, at 7.4%. The highest were recorded in Estonia, Lithuania, and Hungary, at 22.5%, 22.1% and 21.9%, respectively.

Core inflation in the eurozone came in at 5.0% in October, up from 4.8% the month before and in line with the initial estimate.

British finance minister Jeremy Hunt outlined his Autumn Statement in response to the car crash of a mini-budget in September – so bad it now has its own Wikipedia entry - which spooked bond markets.

Hunt froze tax thresholds to drag millions more people into the revenue net at a time when they face inflation of 11.1%, a four-decade high, crippling energy bills that will surge again in April just as the government turns off the support lifeline, rising interest rates and a looming recession, if it isn’t here already.

He also slashed allowances on capital gains and dividends.

In equity news, power generator Drax slumped after Hunt announced the introduction of a temporary 45% levy on electricity generators. He also confirmed that the energy industry windfall tax will rise to 35% from 25% from 1 January 2023 until March 2028.

Shares in Royal Mail owner International Distributions Systems fell as industrial action and weak parcel volumes hit profits at the 500-year-old postal carrier.

Siemens gained as it posted an upbeat quarterly earnings statement.

Ocado slid as hedge fund Kintbury Capital said it expects 50% downside in the shares at best.

Reporting by Frank Prenesti for Sharecast.com