Europe close: Markets begin week already battered and bruised

The Wall Street-inspired selling carnage battered European markets throughout Monday’s session, after rolling through Asia overnight as global inflationary fears took hold.

The pan-European Stoxx 600 was down 1.56% at 382.00, with Germany’s DAX falling 0.76% to 12,687.49 and the CAC 40 slipping 1.48% to close at 5,285,83.

In Spain, the IBEX 35 was off 1.44% at 10,064.50, while London’s FTSE 100 was off 1.46% at 7,334.98 and the more domestic-focussed FTSE 250 slid 1.36% to 19,690.49.

US stocks closed sharply lower on Friday to end a gloomy week as a strong non-farm payrolls report added weight to rate hike expectations.

Stocks were hit by rising global bond yields and the downbeat tone in equity markets was only exacerbated after data revealed that US average hourly earnings surged in January as more jobs were added than expected, adding strength to the conviction that interest rates will be hiked three or even four more times this year.

In corporate news, shares in UK defence contractor Babcock fell 0.67% ahead of a trading update this week and against a backdrop of budget pressures at the Ministry of Defence, the firm's largest customer.

Ryanair shares were 1.71% lower in London, as the budget airline warned over potential industrial disputes with pilots.

Chief executive Michael O'Leary stated that he would be prepared to take a hit from strikes rather than meet pilot demands over pay and conditions.

The company posted a 6% rise in third-quarter pre-tax profit on Monday as revenue and passenger numbers jumped and a share buyback was announced, but the flying coach service struck a cautious note on the outlook as it warned over disruption from talks with unions.

Electrocomponents shares rose 2.78% as the company said its “strong” underlying revenue performance in the first half has continued into the first four months of the second half, with underlying revenue growth remaining stable at the 14% seen in the second quarter.

Also on the upside, B&Q owner Kingfisher was in the black by 2.26% after Australian retailer Wesfarmers wrote off competitor Homebase for $1bn, which is more than it bought it for two years ago, and said it could close between 20 and 40 stores.

Shares in outsourcer Capita surged 7.27% as a blog post on the Woodford Investment Management website suggested that its low valuation could make it a big target.

In a blog dated 2 February, Neil Woodford said: “There are of course buyers of corporate assets that are not disciples of the momentum school of investing - I suspect that other businesses and private equity buyers will be circling Capita as I write.”