European shares fell on Thursday as sticky inflation spurred concerns of more rate hikes by the European Central Bank, while investors looked ahead to more corporate earnings.
The pan-European STOXX 600 index was down 0.3 per cent, with automobile shares dragging the index. The auto index .SXAP lost 3.1 per cent after Tesla boss Elon Musk said the electric vehicle maker would prioritize sales growth ahead of profit.
ECB board member Isabel Schnabel said on Wednesday that underlying inflation in the euro zone is "sticky" and all prices apart from energy were showing "high momentum".
Market bets for higher rates were boosted after data showed consumer prices in Britain fell less than expected in March.
"With unrest in the banking sector fading and inflation still high, for example in the UK yesterday, we see monetary policy being repriced higher again," said Joost van Leenders, senior investment strategist at Van Lanschot Kempen.
"You have sticky inflation and higher expectation for monetary policy, but also lower growth. And that is a negative picture for equities and for earnings."
Investors will keep a close eye on consumer confidence data, due at 2pm GMT, which is expected to show a slight improvement in consumers' expectations of the economic conditions in the region in April compared to a month ago.
On the earnings front, Sartorius AG SATG.DE dropped 9.4 per cent after the Franco-German lab equipment maker reported a decline in first-quarter sales and earnings.
Sweden's Husqvarna HUSQb.ST jumped 4.6 per cent, a top gainer on the index, after the garden equipment maker reported first quarter adjusted operating profit that topped market expectations.
Sweden's AB Volvo VOLVb.ST rose 1.5 per cent as the truckmaker lifted its outlook for key heavy-duty truck markets in Europe and North America this year.
Swiss elevator and escalator manufacturer Schindler SCHP.S inched up 0.6 per cent after it reported a 47 per cent jump in first-quarter profit despite a challenging economic environment.
German producer prices rose less than expected in March. Producer prices of industrial products were up 7.5 per cent year-on-year, compared to a Reuters poll that had indicated a rise of 9.8 per cent.
