Europe close: Gas price spike hits stocks
European shares finished sharply lower on Monday amid a spike in natural gas prices even as investors were already questioning just how quickly inflation would fall back in 2023.
On Saturday, German central bank chief Joachim Nagel told the Rheinischen Post that the inflation outlook had worsened and the European Central Bank would need to raise rates regardless of recession risks.
The same day, Russian state-owned gas giant, Gazprom, announced a three-day halt of the Nord Stream 1 gas pipeline for routine maintenance from 29 August, but traders feared much worse outcomes.
The pan-European STOXX 600 was down 0.96% to 433.17, outperforming most of the main euro area stock market indices with all major regional bourses lower.
Germany's Dax fared worst in the region, surrendering 2.32% to 13,230.57, alongside a 1.80% decline on France's Cac-40 of 1.80% to 6,378.74.
Hitting the Dax, Dutch TTF gas futures jumped by 35.69% to €280.24/MWh.
Propping up the Stoxx 600 on the other hand was a 0.4% gain for the Basic Resources sector sub-index after China's central bank cut interest, although analysts in the City were of the opinion that more measures were needed.
In the background, traders were waiting for further guidance on the US Federal Reserve's plans for monetary policy tightening at this week's Jackson Hole symposium, with a keynote address from the central bank's chair Jerome Powell on Friday.
In equity news, shares in budget airline Wizz Air dropped sharply as the company said chief financial officer Jourik Hooghe has decided to step down to pursue other opportunities.
Vodafone shares slipped after the telecoms giant said it was planning to sell its Hungary business to 4iG and Corvinus, a Hungarian state holding company, for €1.8bn.