European shares drop on inflation risk concerns; Lagarde speech eyed

Germany's benchmark stock index dropped the most among its European peers, down 1.1%. Europe will decide whether to extend the suspension of its rules limiting budget deficits and debt, known as the Stability and Growth Pact (SGP), in coming weeks, the Commissioner for Economy Paolo Gentiloni said.

European shares fell on Monday as concerns over the risk of higher inflation due to a jump in commodity prices tempered optimism around a vaccine-led economic recovery.

The pan-European STOXX 600 index was down 0.7% by 0810 GMT, led by declines in technology companies and food and beverage stocks. Germany's benchmark stock index dropped the most among its European peers, down 1.1%.

Europe will decide whether to extend the suspension of its rules limiting budget deficits and debt, known as the Stability and Growth Pact (SGP), in coming weeks, the Commissioner for Economy Paolo Gentiloni said. Britain's FTSE 100 dropped 0.4%, as Prime Minister Boris Johnson plots a path out of COVID-19 lockdowns in an effort to gradually reopen the battered economy.

All eyes will be on European Central Bank President Christine Lagarde's speech on stability, economic co-ordination and governance in the EU later in the day. In company news, French car parts maker Faurecia lost 1.5% even after it targeted its sales close to 25 billion euros ($30.29 billion) and an operating margin above 8% of sales by 2025.