European shares hit three-month low as oil spike revives inflation and rate worries
Banks and financial services stocks were among the biggest decliners
European stocks plunged to a three-month low on Tuesday as soaring oil prices and rising bond yields dampened investor sentiment, ahead of the US Federal Reserve's rate decision. The Stoxx 600 index closed at 634.18 points, marking its lowest closing level since June 12. Major regional bourses also experienced declines. Among the biggest culprits were banks and financial services stocks, which shed 0.9 percent and 1.9 percent, respectively.
UBS plummeted 3.4 percent, ranking among the top decliners on the Stoxx 600. The sector faced pressure after Bank of America CEO Brian Moynihan warned about a potential 10 percent drop in the bank's investment banking fees in the third quarter, with sales and trading revenue expected to remain flat. This news fueled fears about the bank's earnings potential and contributed to a downward adjustment in earnings outlooks.
L'Oréal surpassed LVMH to become France's most valuable listed company, marking the first time since 2017 that a non-luxury firm held the top spot on the Paris market. Meanwhile, higher borrowing costs and strong economic data in Germany tempered the cautious sentiment.
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