(Reuters) -Europe bourses fell on Tuesday, extending a sell-off driven by escalating fears of a recession amid aggressive policy tightening by central banks, with London stocks reeling from worries about a new economic plan. Germany's DAX slipped 0.7% to November 2020 lows, while Italy's MIB index lost 1.2% giving back all of Monday's election relief gains. London's blue-chip FTSE index slipped 0.5% as the pound recovered from Monday's record lows on worries about the impact from the UK's "mini budget".
European stock markets edged higher Tuesday, rebounding after a hesitant start to the week but investors remain concerned about rising interest rates and a deteriorating economic outlook. European equities gained Tuesday, for the first time in four sessions, but sentiment remained weak with investors concerned that aggressive monetary tightening to combat soaring inflation will push not only Europe but much of the world, into recession. The European Central Bank is expected to raise interest rates further over its "next several meetings", ECB President Christine Lagarde said on Monday at a hearing of the European Parliament's Committee on Economic and Monetary Affairs, with these hikes designed to dampen demand.
European stock markets stabilized Monday after recent losses, but concerns remain over a deteriorating economic outlook and raised political uncertainty. European equities have been under pressure, with the DAX down over 22% year to date, as investors fretted over the toxic combination of high inflation, aggressive monetary tightening, a brewing energy crisis and the economic consequences of the Russia-Ukraine war. Dismal business activity data from the Eurozone and the U.K. last week heightened fears of a regional recession, and investors will look to the release of the German Ifo business climate index for September later in the session for further clues of corporate sentiment in the Eurozone’s largest economy.