European stocks fall as metals, oils stocks weigh

European shares closed near seven-week lows yesterday, led down by resource stocks as metals markets tumbled, while oils such as BP and Total mirrored a slide in crude prices.

The mood was nervous after a bigger-than-expected jump in US consumer prices and comments from the US Federal Reserve on Tuesday focused investor attention on the prospect of bigger interest-rate hikes.

The FTSEurofirst 300 closed 0.3 per cent lower at 1,078.35 points. Earlier in the session it hit 1,072.74 points, the index's weakest level since early last month.

Elsewhere in Europe, Paris's CAC-40 fell 0.4 per cent and Frankfurt's DAX was near flat. In Britain, the FTSE 100 index lost 0.5 per cent.

"Inflation fear is definitely dominating the market and the CPI figure didn't help either," said Lex Werkheim at Dutch broker Eureffect. US consumer prices posted their biggest jump in five months last month.

"People are worried that dividend yields will lose their attractiveness because of higher interest rates on bonds. Corporates which are debt-laden will have higher financing costs. It's that kind of fear which is holding the market back," Mr Werkheim said.

The crude price was also a feature, slipping below $55 a barrel as US crude inventories rose to their highest level in nearly three years.

Oil giant BP fell two per cent, while Total and Royal Dutch were down about 1.5 per cent each.

Miners and steelmakers were another talking point as gold tumbled to its lowest for a month and other metals also fell.