LONDON—European shares dropped in early trading on Thursday and the safe-haven dollar was up after the latest red-hot U.S. inflation reading increased investor caution about Federal Reserve rate hikes.
Wednesday’s data showed U.S. consumer prices jumped 9.1 percent year-on-year in June, up from May’s 8.6 percent rise.
The data was seen as firming the case for the Federal Reserve to raise rates aggressively. Policymakers might consider a 100 basis point increase at the July meeting, Atlanta Federal Reserve Bank President Raphael Bostic said.
By early European trading, money markets were pricing in a 54 percent chance of a full percentage point hike at the July meeting and a 46 percent chance of a 75 basis point rise….