European stock markets fell yesterday as traders reacted to data giving early indications about the economic fallout of Britain’s Brexit vote.
London’s benchmark FTSE closed 0.7% lower, while Frankfurt’s DAX 30 shed 0.6% and the Paris CAC 40 lost 0.8%.
And US stocks retreated from record levels early yesterday on revived worries about the overvaluation of equities.
Investor confidence in Germany rebounded slightly this month, as the shock over Britain’s vote in June to leave the European Union began to wear off, a leading survey showed.
The investor confidence index calculated by the ZEW economic institute gained 7.3 points to stand in positive territory at 0.5 points in August, recovering from a massive 26-point slump in July.
The index shows a “recovery somewhat from the Brexit shock”, said the institute’s president Achim Wambach.
But analysts struck a note of caution.
“The recovery in expectations should not be over-interpreted and must be taken against the backdrop of the strong retreat in July,” said Bayern LB analyst Stefan Kipar. 
He also warned that August’s data was not an indication that the European economy would be untouched by Brexit.
Separate data meanwhile showed Britain’s annual inflation rate had edged higher last month – while it is set to climb further as a weak pound caused by the Brexit vote raises import prices.
The 12-month Consumer Price Index rose by 0.6% in July, the Office for National Statistics said in a statement.
“This news provided a much-needed moment of respite for the pound, which surged against the dollar,” said Connor Campbell, analyst at Spreadex trading group.
On Wall Street all three major indices set high marks on Monday, but worries yesterday included “concerns about the market being ahead of itself, and some spotty economic data,” said Briefing.com analyst Patrick O’Hare.
Data showed US consumer prices were up a modest 0.2% in July, the same pace as the previous two months, while housing starts rose 2.1% from June and industrial output gained 0.7%.
On the corporate front yesterday, shares in mining giant BHP Billiton closed up nearly 1% in London deals, despite the company announcing an annual net loss of $6.39bn.
Its worst-ever result was caused by a mine dam disaster in Brazil and weak commodity prices.
BHP shares rallied however, with investors cheered by a larger-than-expected dividend payment.
And in Frankfurt, shares in German industrial gas supplier Linde soared 11% higher after it confirmed it was in “preliminary discussions” about a possible merger with US rival Praxair.