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European shares retreat from record highs on hawkish Fed

US Federal Reserve

The pan-European STOXX 600 index declined 0.3% following a nine-day gaining streak

Shares in Europe retreated from record high level Thursday after the US Federal Reserve took a hawkish tone to its policy.

The pan-European STOXX 600 index declined 0.3%, after a nine-day gaining streak as the Fed said it could begin raising interest rates a year earlier than expected. S&P 500 futures fell 0.5%.

Mining stocks lost 1% as the dollar rose and commodity prices were dented on U.S. central bank’s comments. Utility and technology shares were also among the biggest decliners in morning trading.

While central banks may seem fairly relaxed about the inflation outlook, they still have to look a lot further out, and if the economy improves as expected, monetary policy will have to change, said Michael Hewson, chief market analyst at CMC Markets UK.

The fact that the Fed is slowly preparing the ground now may be unsettling for markets, but it is also necessary, and in the here and now, monetary policy still hasn’t changed that much, he said.

With the benchmark European stock index shrugging off inflation concerns to gain for four straight weeks, the focus will be on final May inflation numbers for the euro zone, due Thursday.

In company news, German biotech CureVac NV said on Wednesday its COVID-19 vaccine missed the main goal in a late-stage trial, raising doubts about the potential delivery of hundreds of millions of doses to the European Union (EU).

The company’s shares tumbled 44.3% and were on course for their worst session since their August 2020 U.S. IPO.

European travel stocks gained 0.5% as UK said it was considering allowing those who are double vaccinated against COVID-19.

British Airlines-owner IAG, easyJet and Ryanair jumped between 3.5% and 4.2%.

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