Europe's benchmark stock index erased early gains on Wednesday, dragged by a slide in Belgian pharmaceutical company argenx, even as the telecom sector got a boost from Telefonica shares after the Spanish government unveiled plans to buy a stake.
The pan-European STOXX 600 (.STOXX) was down 0.2% by 0923 GMT, after gaining as much as 0.5% earlier on rising bets of interest rate cuts following soft inflation prints.
Data showed German producer prices fell more than expected in November, a day after another set confirmed that euro zone inflation slowed sharply to 2.4% last month on a year-on-year basis. The German DAX (.GDAXI), however, dipped 0.1%.
"Following the federal government's decisions on the 2024 federal budget, it is becoming apparent that the inflation rate in Germany will not fall again in January but will probably even increase slightly further," Commerzbank Research analysts noted.
"This could also affect other groups of goods in the following months and thus contribute to the core inflation rate stabilizing well above the ECB's target of 2%."
Meanwhile, British inflation dropped way more than expected last month, with the headline rate falling to its September 2021 lows. UK's FTSE 100 (.FTSE) climbed 0.9%, hitting its highest level since late May.
Cooling inflation and evidence of economic weakness have bolstered bets of rate cuts, prompting strong gains in stocks globally. The STOXX 600 has gained 12% year-to-date, with the German DAX and France's CAC-40 (.FCHI) hitting record highs last week.
Among major movers, argenx (ARGX.BR) slumped 31% to the bottom of the STOXX 600 after reporting negative top-line results from its ADDRESS study. KBC also cuts its stock rating to "accumulate" from "buy".
The stock is set to erase 7.6 billion euros in market cap.
Belgium's BEL 20 (.BFX) blue-chip index dropped 3.3%, on track for its biggest one-day decline so far this year, if losses hold.
Meanwhile, Telefonica (TEF.MC) climbed 4.5% to top the STOXX 600 after the Spanish government said it would buy a stake of up to 10% in the company in a counterbalance to a similar acquisition by Saudi Arabia's STC (7010.SE).
The broader telecommunications (.SXKP) index advanced 1%, leading sectoral gains.
Intertek Group (ITRK.L) rose 3% after Exane BNP Paribas upgraded the British product testing firm to "outperform" from "underperform".
Deutsche Post (DHLn.DE) lost 1.9% after U.S. peer FedEx (FDX.N) cut its full-year revenue forecast and reported lower-than-expected quarterly profit.
DS Smith (SMDS.L) shed 2.2% after UBS downgraded the British cardboard maker to "neutral" from "buy".
