Europe close: Stocks reel as central banks tighten; SNB surprises with 50bp move

European stocks slumped by more than 2% at midday on Thursday as inflationary fears gripped the market as the Bank of England lifted its benchmark rate in a bid to combat spiralling inflation, as expected, but with Swiss National Bank surprising with a 50bp hike in short-term rates.

The day before the US Federal Reserve had raised interest rates by an aggressive 75 basis points - its largest single move since 1994.

"Today's declines have seen big falls across the board, below the lows this week, with all the major European markets falling to three-month lows, with the DAX and FTSE100 on course to head towards the levels we saw at the beginning of March in the aftermath of the initial Russian invasion of Ukraine," said CMC chief market analyst Michael Hewson.

The pan-European Stoxx 600 dropped 2.47% to 402.88, alongside a 3.31% drop for the German Dax to 13,038.49 while the FTSE Mib gave back 3.32% to 21,726.92.

Euro area government bond yields were gerally modestly ligher at the 10-year tenor, although Italian ones eased for a second day.

Euro/dollar on the other hand jumped by 1.18% to 1.0567 on this occassion while front-dated Brent was flat.

In equity news, retail shares were out of favour after UK online fashion retailer ASOS slumped almost a third on the back of a warning that surging inflationary pressures were affecting shopping behaviour.

German rival Zalando dropped 13% and JD Sports Fashion 8%.

Shares in THG dived 29% after Belerion Capital said it no longer planned to make an offer for the online retailer.