European stocks slip lower; U.K. economy contracted more than expected

investing.com:

Investing.com — European stock markets weakened Wednesday after the U.K. contracted by more than expected in July, while investors braced for key U.S. inflation data.

At 03:25 ET (07:25 GMT), the DAX index in Germany traded 0.2% lower, the CAC 40 in France dropped 0.1% and the FTSE 100 in the U.K. fell 0.2%.

The U.K. economy contracted by 0.5% on a monthly basis in July, according to data released earlier Wednesday, more than the 0.2% expected, with strikes in hospitals and schools weighing on output.

Industrial production fell 0.7% on the month in July and manufacturing output dropped 0.8%, highlighting the difficulties the country’s industrial base was having, but all major sectors of the economy — services, manufacturing and construction — declined during the month.

The BOE is still widely expected to raise interest rates to 5.5% from 5.25% next week, with wage growth showing few signs of slowing, but this economic slowdown raises the possibility that this hike could mark the end of a tightening cycle which began in December 2021. 

Ahead of the BOE, the European Central Bank meets on Thursday with expectation of another quarter-point rate hike rising following a Reuters report that the central bank expects inflation will stay above 3% next year in its updated forecasts, far exceeding the 2% target.

The ECB has raised rates at each of its past nine meetings and another increase of 25 basis points would lift the key deposit rate to 4%.

July eurozone industrial production is due for release later in the session, and is expected to have fallen 0.7% on the month, a drop of 0.3% on an annual basis.  

However, the day’s key economic data release will come from the U.S., in the form of the August consumer price index. This