UPDATE 2-European shares end lower as high yields, inflation concerns weigh

* UK stocks slip as inflation rises to 3-month high
* Gucci owner Kering bottoms out STOXX 600
* Oil and gas stocks among few gainers

(Updates to market close)
By Sagarika Jaisinghani and Ambar Warrick
Feb 17 (Reuters) - European shares retreated from near
one-year highs on Wednesday as concerns over a possible spike in
inflation and rising bond yields prompted a pullback in
risk-driven assets, while Gucci owner Kering led losses after
posting lower sales.
The pan-European STOXX 600 index .STOXX closed 0.7% lower,
while London's mid-cap FTSE 250 .FTMC lost 1.3% as data showed
British inflation rose a little more than expected in January.
The possibility of a near-term spike in inflation, coupled
with rising debt yields, has seen investors pricing in the
likely tapering of monetary policy by major central banks, which
in turn could weigh on risk-driven assets.
"We believe central banks for now have strong incentives to
lean against any rapid rise in nominal yields even as inflation
rises...Yet rising debt levels may eventually pose risks to the
low-rate regime," analysts at Blackrock Investment Institute
said in a note to clients.
"Whether the low-rate regime lasts will depend not only on
monetary policy but on the perceived safety of government bonds.
Markets may eventually demand a higher premium for government
bonds, even if central banks are more tolerant of higher
inflation."
Bets on a pickup in inflation pushed German bond yields to
their highest in nearly a year, while U.S. yields recently
scaled a similar milestone. GVD/EUR US/
Accommodative monetary policy and unprecedented stimulus
measures had pushed Europe's benchmark STOXX 600 more than 50%
up from a coronavirus-driven crash in March.
But the index lagged its U.S. counterpart due to fears of
the business impact from prolonged lockdowns, as well as a rocky
vaccine rollout across the euro zone.
Investors were awaiting cues on the Federal Reserve's stance
from the minutes of its recent meeting, due later in the day.
In company news, shares of French conglomerate Kering
PRTP.PA bottomed out the STOXX 600 as it said sales from its
Gucci brand fell 10.3% in the fourth quarter. The broader European retail index .SXRP lost 3.1% and
lagged its peers for the day.
Lucky Strike maker British American Tobacco BATS.L shed
3.9% even as it reported a stronger-than-expected annual profit,
while Nivea maker Beiersdorf BEIG.DE tumbled 5.9% after it
said it did not expect a recovery in profitability in 2021 even
though sales should rise. Swedish cloud computing services provider Sinch AB
SINCH.ST topped the STOXX 600 after it agreed to buy
U.S.-based communications company Inteliquent for $1.14 billion.
Oil and gas stocks .SXEP were among the few gainers for
the day, tracking strength in the crude market.