EUROPE MARKETS: European Stocks Slip As Inflation Falls, U.K. Election Nerves Set In

By Sara Sjolin, MarketWatchFeaturesDow Jones Newswires

Pound slumps after voting model points to slide in Tory support

European stock markets closed mostly lower Wednesday, as investors digested the latest bout of uncertainty surrounding the U.K. election and assessed a sharper-than-expected fall in eurozone inflation.

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The Stoxx Europe 600 index edged down 0.1% to end at 389.99, for a fifth straight session of losses. The benchmark on Tuesday fell 0.2% ( as bank stocks declined on concerns over a potential early election in Italy.

For the month, however, the Stoxx 600 registered a 0.8% gain.

"Markets are wilting slightly at the moment. There's nothing sinister around, but it does feel like there is a slight loss of confidence as data momentum is stalling a touch and politics continues to be unpredictable," said Jim Reid, strategist at Deutsche Bank, in a note.

Investors were watching the latest developments in the U.K. ahead of the country's general election next week. A projection from YouGov, reported by the Times newspaper, indicated that the Conservatives might lose 20 seats ( in the June 8 vote. That means Prime Minister Theresa May's party would lose its current majority in parliament, which it has had since the election in 2015.

The pound tanked to an intraday low of $1.2770 after the report, on concerns a hung parliament would make Brexit negotiations with Brussels more difficult

Later in the session, however, two fresh polls showed the Conservatives were still in the lead, whipping sterling back into positive at $1.2901.

The pound action also dictated trade for the FTSE 100 index , which ended 0.1% lower at 7,519.95.

Other European indexes were more mixed. France's CAC 40 fell 0.4% to 5,283.63, while Germany's DAX 30 rose 0.1% to 12,615.06.

Economic updates:Eurozone inflation for May slid ( to 1.4% from 1.9% in April, missing forecasts of a 1.5% reading. Meanwhile, unemployment in the currency area dropped to 9.3% in April from 9.4% in March. Analysts had expected the joblessness rate to stay at 9.4%, according to FactSet.

Germany's unemployment rate fell to a new low ( of 5.7% in May, from 5.8% in April.

The euro was largely unmoved after the reports, fetching $1.1179, compared with $1.1178 ahead of the data. Later in the session, the shared currency jumped to $1.1235, compared with $1.1187 late Tuesday in New York.

Movers: Shares of Ericsson AB (ERIC) (ERIC) jumped 4.5% after reports activist investor Cevian Capital has bought a $1 billion stake in the Swedish telecom-equipment maker.

Shares of Metro AG (MEO.XE) lost 2.6% after the German retailer said it swung to an operating loss in second quarter (

Shares of Tesco PLC (TSCO.LN) (TSCO.LN) gave up 0.9% after the latest Kantar data on U.K. supermarkets showed the grocer's market share fell to 27.8% ( in the 12 weeks to May 21, from 28.3%.

(END) Dow Jones Newswires

May 31, 2017 12:09 ET (16:09 GMT)