(Bloomberg) -- European stocks slipped, dragged down by hefty losses in gambling operator Flutter and uncertainty over upcoming inflation data from Germany and other euro-area nations.

The Stoxx 600 Index closed 0.6% lower, with gambling operator Flutter Entertainment Plc dragging down the travel and leisure sector with a drop of more than 7% after a progressive sports betting tax passed in the Illinois senate. Auto shares rose, while UK housing sector stocks got a boost from a Sky News report that Persimmon Plc was exploring a £1 billion ($1.27 billion) takeover bid for Cala Group Ltd. 

International Distribution Services Plc, the embattled owner of Britain’s Royal Mail, edged higher even as it reported another annual loss late on Friday, days after welcoming a £3.5 billion ($4.5 billion) bid from Czech billionaire Daniel Kretinsky. UK markets were closed Monday for a holiday.

Europe’s benchmark index has scaled record highs this month on optimism that inflation will cool enough to allow central banks to cut rates later this year. Investors are betting that the European Central Bank will ease policy this month, well ahead of the Federal Reserve. But this week’s inflation data could show how fast the ECB can continue cutting rates after June.

Such concerns have helped cool the upward momentum in the Stoxx 600 in recent days. The index’s so-called MACD momentum — which shows the relationship between two moving averages of a security’s price — is weakening, according to data compiled by Bloomberg.

Liberum strategist Susana Cruz expects the inflation data to give markets some “reassurance” on the outlook for rate cuts.

“Rate cuts will lift sentiment toward the euro-zone economy and improve the export outlook,” Cruz said. “This, combined with some positive signs in PMI data for the manufacturing sector, supports our bullish view on cyclical stocks for the rest of 2024.”

Meanwhile, Citigroup Inc. strategists said the upcoming European elections have historically tended to have little impact on the region’s equities. European stocks tend to modestly underperform developed-market peers, while at the sector level, IT tends to outperform post-election, they wrote in a note.

For more on equity markets:

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  • Cheap European Valuations Getting in the Way of IPOs: ECM Watch
  • US Stock Futures Rise

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--With assistance from Jan-Patrick Barnert.

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