European stock markets weakened sharply Wednesday on concerns that high inflation, fed by increasing energy costs, will force central banks to tighten monetary policy faster, choking off the post-pandemic recovery.

At 3:40 AM ET (0740 GMT), the DAX in Germany traded 1.8% lower, the CAC 40 in France fell 1.7% and the U.K.’s FTSE 100 dropped 1.3%.

German Factory’s order, a normally reliable leading indicator of trends in Europe’s largest economy, set the negative tone with a shock 7.7% decline in August, a sharp slowdown from the 4.9% gain in July. The slump was caused largely by the key automotive sector, which has repeatedly flagged problems with its supply chain this year. 

Energy markets continue to create headaches for industry, with U.K. gas prices hitting a new all-time high of 330 pence a therm, around 97 euros a megawatt-hour. 

Oil also traded at multi-year highs amid global concerns about energy supply, particularly after the so-called OPEC+ bloc decided against speeding up a pre-agreed pace of output increases. 

By 3:40 AM ET,  futures traded 0.4% higher at $79.28 a barrel, having earlier climbed to its highest level since November 2014. The Brent contract rose 2% to $82.91, after rising to a three-year high in the previous session.

In corporate news, Tesco  stock soared 4.8% after the U.K. supermarket chain raised its full-year outlook as it reported a 16.6% rise in first-half core retail profit. It also announced a share buyback, with the first tranche of 500 million pounds in shares to be bought by October 2022. 

The FTSE MIB climbed Down by  1.73% to 25,496.20. In the cash markets, the DAX  Germany was trading Down 2.00%  to 14,890.65. CAC 40  in France  rose by 1.76% to 6,460.37 while the FTSE 100  in the U.K. were down  by 1.26% to 6,984.35. ,at the time of writing.