European stock markets mostly headed lower on Wednesday, as investors digested the latest bout of uncertainty surrounding the U.K. election and assessed a sharper-than-expected fall in eurozone inflation.
The Stoxx Europe 600 index SXXP, -0.02% edged down 0.1% to 390.24, setting it on track for a fifth straight session of losses. The benchmark on Tuesday fell 0.2% as bank stocks declined on concerns over a potential early election in Italy.
For the month, the Stoxx 600 was still set to log a 0.8% gain.
“Markets are wilting slightly at the moment. There’s nothing sinister around, but it does feel like there is a slight loss of confidence as data momentum is stalling a touch and politics continues to be unpredictable,” said Jim Reid, strategist at Deutsche Bank, in a note.
Investors were watching the latest developments in the U.K. ahead of the country’s general election next week. A projection from YouGov, reported by the Times newspaper, indicated that the Conservatives might lose 20 seats in the June 8 vote. That means Prime Minister Theresa May’s party would lose its current majority in parliament, which it has had since the election in 2015.
The pound GBPUSD, -0.3188% tanked to an intraday low of $1.2771 after the report, on concerns a hung parliament would make Brexit negotiations with Brussels more difficult. The weaker pound helped boost the globally-exposed FTSE 100 index UKX, +0.28% , setting it on track for a new all-time closing high.
Economic updates: Fresh factory data out of China did little to inspire investors, with the official purchasing managers index for May coming in unchanged at 51.2.
In Europe, Germany’s unemployment rate fell to a new low of 5.7% in May, from 5.8% in April.
Eurozone inflation for May slid to 1.4% from 1.9% in April, missing forecasts of a 1.5% reading. Meanwhile, unemployment in the currency area dropped to 9.3% in April from 9.4% in March. Analysts had expected the joblessness rate to stay at 9.4%, according to FactSet.
The euro EURUSD, +0.0536% was largely unmoved after the reports, fetching $1.1179, compared with $1.1178 ahead of the data. The shared currency bought $1.1187 late Tuesday in New York.