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European stock markets were in the red on Tuesday as US president Joe Biden was set to meet the Federal Reserve's Jerome Powell to discuss runaway inflation.
It also came as Russia announced that it had cut off gas supply to the Netherlands amid a payment row.
In London, the FTSE 100 (^FTSE) index ended almost 0.1% lower, closing in negative territory despite managing to stage modest gains throughout the session.
Russia's Gazprom (GAZP.ME) said it had stopped delivering gas to the Netherlands after Dutch gas trader GasTerra refused to pay them in roubles.
GasTerra, which is partially owned by the Dutch state, said it had "decided not to comply with Gazprom's one-sided payment requirements".
The Netherlands has relied on Russia for 15% of its gas supply, however GasTerra said it had anticipated the cut in supply by buying gas from other providers. Russia has already cut off Poland, Finland and Bulgaria.
"As we head into summer Russia has less leverage with its oil and gas supplies but the Netherland’s move is a reminder of the havoc Moscow could wreak later this year as temperatures drop and this remains a lingering inflationary threat," AJ Bell investment director Russ Mould said.
Watch: Why are gas prices rising?
Elsewhere, French inflation soared to an all-time high, adding pressure on the European Central Bank (ECB) to hike interest rates.
Consumer prices rose 5.8% in the 12 months to May, driven by soaring energy and food costs.
According to the White House, Biden and Powell will gather on Tuesday as the Fed and Biden administration battle rising consumer prices, supply chain disruptions, an energy crisis triggered by the Ukraine war, and the pandemic fallout.
Biden last met Powell in November, when he nominated him for a second term as central bank chair.
Meanwhile, the US housing market remained buoyant in March despite rising mortgage rates. Nationally, home prices were 20.6% higher than they were in March 2021, according to the S&P CoreLogic Case-Shiller Home Price Index, up from 20% gain in February.
Asian markets were mixed on Tuesday as investors looked to maintain a global rally, with inflation on the forefront of traders’ minds after a rise in oil prices.
In Tokyo, the Nikkei (^N225) fell 0.3% while the Shanghai Composite (000001.SS) was 1.2% higher on the day. The Hang Seng (^HSI) rose 0.8% in Hong Kong after two days of gains that saw it put on around 5%.
It came as China’s factory sector came in relatively weak last month, despite a slight improvement, with its PMI rising to 49.6, from 47.4 in April.
The services sector struggled more, with the "non-manufacturing PMI" jumping to 47.8 after plunging to 41.9 a month ago.
Zhao Qinghe, senior statistician at China’s National Bureau of Statistics, said: “This showed manufacturing production and demand have recovered to varying degrees, but the recovery momentum needs to be strengthened."