By Devik Jain

(Reuters) – European stocks fell on Tuesday as a strike by Norwegian oil and gas workers exacerbated worries about an energy shock in Europe and added to concerns over red-hot inflation.

The continent-wide STOXX 600 index was down 0.4%. It gave up the opening gains, which were powered by positive economic data from Asia and a report that U.S. President Joe Biden was considering rolling back some tariffs on Chinese imports. [MKTS/GLOB]

Norwegian offshore workers began a strike on Tuesday demanding wage hikes to compensate for rising inflation. This could reduce oil and gas output at a time when supplies of natural gas to Europe are tight due to Russian export cutbacks.

“Their action is set to exacerbate the pain of rising prices and is leading to even tighter supply in the already squeezed energy market,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“It comes at a highly fragile time geopolitically, given that the EU is facing the threat that Russia will turn off the taps abruptly, potential plunging vital industries into crisis.”

European Central Bank Vice President Luis de Guindos said on Monday the euro zone economy could suffer a recession if Russia cuts off gas supplies and industry had to adjust to a shortage of energy.

Concerns about Europe’s dependency on Russian gas and soaring inflation have dampened investor sentiment, with tightening financial conditions also fuelling worries about a hit to economic growth and corporate profits.

The STOXX 600 has shed 16.4% so far this year.

Data showed business growth across the Eurozone slowed further last month, with forward looking indicators suggesting the region could slip into decline this quarter as the cost of living crisis keeps consumers wary.

Europe’s basic resources and automobile sectors were the biggest losers, down 1.5% each.

Among single stocks, Remy Cointreau gained 4% after Jefferies upgraded the French spirits group’s stock to “buy” from “hold”, citing its positioning to navigate inflationary pressures facing staples.

SAS fell 9.2% after the Scandinavian airline filed for bankruptcy protection in the United States to help accelerate restructuring plans, warning strike action by pilots had impacted its financial position and liquidity.

ProSiebenSat.1 tumbled 8.8% after a report Goldman Sachs downgraded the German broadcaster’s stock to “sell” from “neutral”.

(Reporting by Devik Jain in Bengaluru; Editing by Uttaresh.V and Arun Koyyur)