European stocks retreated Wednesday as the EU took precautionary measures in the face of reduced Russian gas supplies. The euro bobbed about before settling lower ahead of a key ECB meeting on Thursday. Oil prices slid on renewed recession worries, while US stocks added to a rally the previous day, which helped Asian stocks move higher. US stocks had rebounded strongly Tuesday as companies’ earnings soothed concerns about the impact on their bottom lines from soaring inflation and rising interest rates. While several firms — such as Apple and Johnson & Johnson — have indicated they have concerns about the outlook, there is a feeling that the sell-off across markets could be reaching a bottom. And some commentators have suggested the second half could see a healthy rally, despite official data continuing to show inflation rising strongly worldwide. UK annual inflation hit a new 40-year high at 9.4pc in June on surging motor fuel and food prices. The same month, inflation in South Africa soared to its highest level in 13 years at 7.4pc. Against a backdrop of decades-high inflation also in the eurozone, all eyes were on the European Central Bank, which is widely expected to announce on Thursday its first-rate hike in more than a decade. Officials have their work cut out for them as they must also try not to drive a stake through the eurozone economy, which has also been hammered by an energy crisis. Talk of a half-point hike — instead of the quarter-point lift most expect — has boosted the euro against the dollar since last week falling below parity for the first time in 20 years. Markets have been increasingly pricing in a half-point hike, although officials had previously indicated a quarter-point rise was most likely. “The central bank has left the door open to super-charging the lift-off previously but given its past tendency to proceed with extreme caution, it would send quite the message about how concerned they’ve become,” said market analyst Craig Erlam at trading platform OANDA. The European single currency caught an early updraft from a Bloomberg News article saying Russia’s Gazprom would resume deliveries through the Nord Stream 1 pipeline Thursday, albeit at reduced capacity. Moscow shut down deliveries to Germany for technical reasons last week, but there had been fears it would keep the taps off in retaliation for European sanctions over its invasion of Ukraine. On Wednesday the German pipeline manager said Russian gas deliveries are expected to resume at the previous level. Taking no chances, the European Commission on Wednesday urged EU countries to reduce their demand for natural gas by 15pc over the coming winter months to overcome Russia’s energy supply “blackmail”. In a statement, the EU’s executive arm also asked member states to give it special powers to force through needed demand cuts if Russia cuts the Europe’s gas lifeline. “Russia is blackmailing us. Russia is using energy as a weapon and therefore, in any event, whether it’s a partial major cut off of Russian gas or total cut off… Europe needs to be ready,” Commission president Ursula von der Leyen told reporters. The commission’s moves saw both European stocks and euro slide lower.