U.S. inflation data due at 1230 GMT
Euro flirts with parity; could worsen EZ inflation
Spanish banks, power utilities extend decline
Orion jumps on raising outlook after Merck deal

July 13 Reuters European shares slipped on Wednesday, as investors awaited data for U.S. inflation, expected to hit 40year highs, cementing the case for a large interest rate hike by the Federal Reserve, and possibly pushing the euro to parity with the dollar.

The panEuropean STOXX 600 index fell 0.8, after ending higher in a volatile session on Tuesday. Banks, healthcare and miners were among the biggest drags on the index.

The euro has tumbled recently, as investors fear aggressive monetary policy tightening could cause a recession. Markets speculate that June U.S. inflation data, due at 1230 GMT, could prompt another rally in the dollar, bringing it at par with the single currency.

Analysts worry that this could worsen eurozone inflation, already at record highs amid an energy crisis.

The current weakness of the euro has an inflationary effect. If the ECB European Central Bank does not counter this with an inflationfighting monetary policy, inflation in the euro area will soon exceed that in the U.S. and purchasing power parity will fall, Commerzbank said in a note.

The ECB, due to meet later this month, is seen delivering its first rate hike in more than a decade. Its move will follow the Fed39;s decision next week. A 75basispoint hike by the Fed will likely be fully priced in…