Consumer price inflation in Spain fell further into negative territory in August, underlining fears over deflationary pressures in the euro zone’s fourth largest economy, official preliminary data showed on Thursday.

In a report, Instituto Nacional de Estadistica said that consumer prices fell by a seasonally adjusted 0.5% this month, compared to a 0.3% drop in July. Analysts had expected Spanish inflation to fall 0.2% in August.

Following the release of the data, the euro was modestly higher against the U.S. dollar, with EUR/USD inching up 0.11% to trade at 1.3207.

Meanwhile, European stock markets were lower. Spain’s IBEX 35 shed 0.4%, Germany's DAX fell 0.6%, France’s CAC 40 declined 0.35%, the DJ Euro Stoxx 50 dipped 0.4%, while London’s FTSE 100 slumped 0.15%.

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