European equity markets fell midweek, weighed down by rising oil prices that revived investor concerns about persistent inflation and further interest-rate hikes. Attention is now focused on the European Central Bank's policy decision on Thursday, with markets pricing in a certain 25-basis-point increase.
The Eurozone benchmark EuroStoxx 50 dropped 1.1% to 6,340 points by midday. Britain's FTSE 100 fell 0.5% to 10,762, while Switzerland's SMI slipped roughly 1.0% to 13,919.
Oil prices climbed amid renewed mutual attacks in the Persian Gulf. Brent crude from the North Sea rose above $100 a barrel for the first time since July 24. Higher energy costs lifted shares in oil producers: Eni gained 1.7%, and TotalEnergies rose 1.2%.
"The ECB will raise its key rate by 25 basis points tomorrow, that much is certain," said Andreas Lipkow of CMC Markets. "The focus now shifts to the subsequent press conference with Christine Lagarde, particularly her assessment of the inflation outlook."
Luxury-sector stocks also came under pressure. LVMH fell 2.2% in Paris, and Burberry declined 3.0% in London. Analysts at HSBC downgraded both shares to "Hold" in a sector study, warning that the luxury environment could prove more difficult to navigate in the second half of the year.
Inditex, the Spanish textile retailer, retreated 4.3% after releasing half-year figures. The company posted robust revenue but faced cost pressures that resulted in somewhat disappointing profit metrics, according to Adam Cochrane of Deutsche Bank Research.
