European shares fall led by retailers and food and beverage sector

By Susan Mathew

May 19 (Reuters) – European stocks tumbled 1.5% on Thursday, extending declines for a second straight session, as dismal results from big U.S. retailers underscored the impact of rising inflation on the world’s largest economy. .

* Following their US counterparts, European retailers fell nearly 2% and were the biggest drag on the pan-European STOXX 600 index, which extended declines after Wednesday’s 1% drop.

* Losses were widespread with all major sub-sectors trading in the red.

* U.S. stocks also fell after Target Corp’s quarterly profit halved and Walmart cut its profit forecast amid a fight against rising fuel and transportation costs as consumers shift spending from big purchases to essentials.

* European retailers such as Tesco and Sainsbury’s also warned last month that higher prices would hit full-year profits.

* Nestlé, Tesco, Diageo and Unilever lost between 4.5% and 5.5% in the session.

* “The fact that benefits are being squeezed for mid- and low-end consumers indicates that inflation is having an impact … in Europe probably more than in the United States because wage expectations are not as good,” he said. Sebastien Galy of Nordea Asset Management.

* “Stagflation stories are being revived, especially in the euro zone,” he added.

(Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru; Spanish editing by Carlos Serrano)

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