Insurers, autos lead losses
French election optimism fades
EZ inflation eases but services costs stuck

July 2 Reuters European stocks fell to twoweek lows on Tuesday as the relief rally in French shares following the first round of parliamentary elections faded, while data pointed to elevated services inflation in the euro zone.

The panEuropean STOXX 600 index was down 0.5 as of 0917 GMT, with insurers and automakers were among the top sectoral decliners.

France39;s bluechip CAC 40 index dropped 0.5 as investors remained cautious ahead of a secondround vote on July 7.

European stocks finished 0.3 higher on Monday, helped by a 1.1 jump in the battered French market after Marine Le Pen39;s National Rally RN party scored a smaller win than some polls had expected, lowering the chance of an absolute majority for the farright party.

Both potential outcomes of this election, whether a farright or a farleft coalition, don39;t give political stability. Both would lead to a lot of indecision, which can cause some concern for investors, said Daniela Hathorn, senior market analyst at Capital.com.

Meanwhile, data showed euro zone inflation eased last month but a crucial services component remained stubbornly high, likely fuelling concern among some European Central Bank policymakers that price pressures could remain elevated.

Consumer inflation in the 20 nations sharing the euro currency slowed to 2.5 in June from 2.6 a month earlier, but a closely watched core inflation…