Video

Thousands of Spanish farmers, who say soaring costs and lousy prices are driving them out of business, marched through Madrid to demand lower diesel tax to cope with record fuel prices. Like Spain's fishermen, farmers gave away tonnes of free food aiming to highlight the difference between meagre farm-gate prices and record grocery bills for consumers. Meanwhile, in Brussels, Germany and other European Union member states rejected a fuel tax-break plan sought by France to cushion surging oil prices. Speaking in Germany, Chancellor Angela Merkel said she was against using fiscal measures to combat the rise. (SOUNDBITE) (German) ANGELA MERKEL, GERMAN CHANCELLOR SAYING: "As to the rise of oil prices, the most important and in my view most effective answer from Europe is: more energy efficiency and an expansion of renewable energy." In afternoon trade, oil was under $135 per barrel. Indices across Europe turned lower as Wall Street lost steam in early trade. The FTSEurofirst 300 was down almost a quarter of a percent. Soaring fuel and food prices may be putting the squeeze on some consumers, but an early summer heatwave sent Britain on a shopping spree. Retail sales were up at the sharpest pace in more than two decades, boosting expectations the Bank of England will raise interest rates. Policymakers, so far, have signalled they are in no rush to hike rates, despite inflation fears, because the economy is expected to slow sharply as the credit crunch filters down to households. Stefanie McIntyre, Reuters.