European shares fall as slowdown fears exacerbated by business growth data

European shares fell on Tuesday, tracking declines in global stock markets as investors renewed concerns about slowing economic growth and monetary policy tightening due to business expansion data for May.

The pan-European Stoxx 600 index was down 0.8 percent by 0818 GMT, giving up much of Monday’s 1.3 percent gain.

Preliminary PMI data showed business growth slowed in the euro zone this month and a shortage of raw materials hampered manufacturing expansion. This added to concerns about global growth as well as data that earlier showed Japanese manufacturing expanded at the slowest pace in three months.

Meanwhile, Europe’s largest economy, Germany, remains on a growth path buoyed by the continued recovery in the services sector, although the demand outlook appears bleak amid inflation and supply problems.

German shares fell 0.8 percent.

All major sectors recorded broad declines, led by the utilities sector. The non-essential consumer goods sector, such as luxury goods that suffer when disposable income declines, was the most influential on the Stoxx 600 index.

The French index, filled with luxury goods stocks, fell more than one percent, recording the largest loss among its peers in the region.

The Stoxx 600 is now more than 12 percent lower than this year’s high hit in early January.

Markets were hit hard by concerns about monetary policy tightening to control rising inflation, the Russian-Ukrainian conflict, and restrictions imposed in China to combat COVID-19 that are constraining demand in the world’s second-largest economy.

Norwegian advertising company Adventa rose 4.7 percent after reporting higher-than-expected core earnings for the first quarter of the year.

Barclays shares rose 2 percent as the start of a suspended share buyback program worth 1 billion pounds.

Shares of British power plant Drax, Centrica and SSE plunged between 7.9 percent and 16 percent after the Financial Times reported that the British government may extend the windfall profit tax to power generation companies.