Chipmakers drag European equities lower ahead of inflation data

European shares fell on Friday, with semiconductor stocks leading the slide following tepid outlook from U.S. memory-chip firm Micron Technology, while investors awaited euro zone inflation data for clues on the pace of interest rate hikes. The continent-wide STOXX 600 index slipped 0.3%, a day after marking its worst quarter since the pandemic-led selling of early 2020 and tracking a dour Wall Street session on data that exacerbated concerns around a recession.

European shares fell on Friday, with semiconductor stocks leading the slide following a tepid outlook from U.S. memory-chip firm Micron Technology, while investors awaited euro zone inflation data for clues on the pace of interest rate hikes.

The continent-wide STOXX 600 index slipped 0.3%, a day after marking its worst quarter since the pandemic-led selling of early 2020 and tracking a dour Wall Street session on data that exacerbated concerns around a recession. Dutch semiconductor equipment maker ASML, Franco-Italian chipmaker STMicroelectronics and German chipmaker Infineon slid between 0.8% and 3.9% after Macron gave a significantly weaker-than-expected business outlook on Thursday.

Europe's technology stocks led morning losses with a 1.7% slump, followed by miners and healthcare stocks. All eyes are now on the first estimate of the June consumer price index for the eurozone, due at 0900 GMT, which will likely show that inflation accelerated to a record high of 8.4% from 8.1% in May.

"The stubborn overshoot of price pressure necessitates a strong response to underpin central bankers' commitment to their inflation targets and to keep expectations in check," strategists at Generali Investments wrote in a note. "That said, we expect a faster growth slowdown and more volatile markets to lead key central banks to terminate their policy normalization closer to neutral rates than markets currently reckon."

European Central Bank policymaker and fiscal hawk Robert Holzmann would have preferred earlier action on interest rates than the ECB's current plan to raise them in July for the first time in more than a decade, he said in remarks published on Thursday. Data showed factory activity in Spain grew last month at the slowest pace since January 2021, while another survey signaled Italy's manufacturing sector grew at the slowest pace in two years amid a challenging economic environment.

The STOXX 600 lost 1.6% this week and shed more than 16% this year so far, as worries over stubborn inflation China's slowing economy, and Russia's invasion of Ukraine curbed risk appetite. La Francaise des Jeux (FDJ) slid 8% after Citigroup downgraded the French lottery group's stock to "sell" from "buy".

Shares of Sodexo gained 5.3% after the French catering and food services group reported upbeat third-quarter revenue, citing strong growth in all business segments and geographies.

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