Europe close: Stocks fall after hawkish Fed chief's speech

European markets fell into the red at the end of the week after US Federal Reserve chairman Jerome Powell's sounded a hawkish note in his speech at the Jackson Hole economic symposium.

The pan-European Stoxx 600 was down by 1.68% to 426.09, with all major regional bourses lower.

Milan's FTSE Mib was at the bottom of the pile from among the euro area's largest economies, retreating 2.49% to 21,895.25 and Germany's Dax fell by 2.26% to 12,971.47.

"While markets have recently taken solace from the tick lower in inflation, today served to highlight the fact that we remain a long way from the position where rates can be brought under control once again," said IG senior market analyst Joshua Mahony.

"For investors, there is a risk that we could embark upon another period of weakness, with the buoyant earnings season fading into a distant memory."

The annual rate of M3 money supply growth slowed from 5.7% in June to 5.5% in July (consensus: 5.6%), further widening the gap relative to consumer price inflation.

That Melanie Debono, senior Europe economist at Pantheon Macroeconomics said, adds "to our conviction that GDP growth in the EZ will slow sharply in the next six-to-nine months."

In Germany meanwhile, GfK’s headline advance consumer confidence index declined to -36.5 for September from a downwardly-revised -30.9 in August, coming in below consensus expectations of -31.8.

A different picture emerged from its neighbour France, where the INSEE official statistics agency's consumer confidence index rose to 82 from 80 in July, above an average forecast of 79. It was the first rise in consumer morale in seven months.

Meanwhile in the UK, energy prices were allowed to rise 80% to more than £3,500 by industry regulator Ofgem, boosting profits for suppliers, but forcing misery on millions of households.

In equity news, shares in software maker Micro Focus almost doubled after the company said it had agreed a £5.1bn takeover, including debt, by Canadian rival OpenText.

The offering is £5.32 per share, a 98% premium on Micro Focus’s current share price, which has fallen 87% over the past three years.