Italian, German shares end lower after EU agrees to ration gas

European shares tumbled on Tuesday, with shares of Germany and Italy in the bottom of the main euro zone exchanges, after European Union countries approved an emergency plan to contain their demand for gas, while Retail names retreated after Walmart’s profit warning.

The EU’s decision came after Russia’s Gazprom said it would cut flows from the Nord Stream 1 pipeline to Germany to 20% of capacity, a move seen as retaliation against Western sanctions over Russia’s war with Ukraine.

“Even if rationing is avoided, rising gas prices driven by supply uncertainty will further slow activity,” said Credit Suisse Europe economist Veronika Roharova.

German stocks are down 17.6% on the year, underperforming the pan-European STOXX 600 index, which is down 12.6%.

Italian papers lose more than 20% as a domestic political crisis adds to the problems.

On the day, the STOXX 600 closed flat with a slight increase of 0.03% at 426.13 points. A rally in defensive sectors such as healthcare, food and beverage and a 2.9% jump at Unilever after a positive balance were offset by a slump in retailers and Swiss bank UBS after a loss of profit.

Retail stocks tumbled 4.2% to record their worst day in nearly four months, hit by a profit warning from top US retailer Walmart Inc, which cited rising food and fuel prices hurting discretionary demand.

• In London, the Financial Times index dropped 0.00%, to 7,306.28 points;
• In Frankfurt, the DAX index fell 0.86% to 13,096.93 points;
• In Paris, the CAC-40 index lost 0.42%, to 6,211.45 points;
• In Milan, the Ftse/Mib index had a devaluation of 1.04%, to 21,159.98 points;
• In Madrid, the Ibex-35 index registered a drop of 0.20%, to 8,069.60 points;
• In Lisbon, the PSI20 index depreciated by 0.06%, to 5,998.98 points.