LONDON, July 1: European stock markets closed sharply lower on Tuesday, extending losses as investors worried about record oil prices, inflation risk, slower economic growth and faltering company earnings.

London’s FTSE 100 index was down 2.60 per cent at 5,479.90 points, in Paris, the CAC 40 lost 2.11 per cent to finish at 4,341.21 points and in Frankfurt the DAX index dropped 1.59 per cent to 6,315.94 points.

Dealers said the tone was overwhelmingly negative, with investors increasingly concerned that the bad news flow will now be followed by signs that corporate earnings the underlying key to stock valuations are coming under pressure.

“In general terms there are concerns about inflation pressures, oil prices and the state of the US economy,” said equities analyst Richard Hunter at Hargreaves Lansdown Stockbrokers in London.

The losses so far this year have been substantial — Paris has fallen 23 per cent, Frankfurt 22 per cent and London 15 per cent — and there had been hopes that the third quarter might have brought some relief.—AFP