Europe midday: Shares pace losses on rate fears; Fresenius slumps

European stocks widened losses as rising geopolitical tensions and a sell off on Wall Street overnight over rate rise fears hit investor sentiment.

The benchmark Stoxx 600 index was down almost one percent at 1145 GMT with all major regional bourses lower. Traders are awaiting minutes from the US Federal Reserve’s latest monetary policy meeting.

Shares in the US and Asia fell sharply overnight after a hot composite purchasing managers’ index reading of 50.2, an eight-month high and higher than expectations of 47.5, according to data released on Tuesday. A level above 50 indicates industry growth.

The data followed strong US payrolls and retail sales figures in recent weeks, prompting US Federal Reserve officials to warn markets that more interest rate rises may be needed to quell inflation.

‘’Investors are waking up to a stark realisation that the Fed’s work is not done, and that interest rates may have to be hiked even higher to cool hot inflation," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

"Waves of exuberance, which have propelled equities higher since the start of the year, have turned into tides of disappointment and apprehension about the difficulties that still may lie ahead for the mighty US economy."

Traders were also digesting hawkish comments on Wednesday from Russia President Vladimir Putin, who tried to justify his illegal invasion of Ukraine, while US counterpart Joe Biden hit back in a speech delivered while visiting Poland.

In regional economic news, German inflation rose 9.2% year on year in January, with a month-on-month increase of 0.5%.

In equity news shares German healthcare group Fresenius surged almost 13% as it said it would slash costs and proceed with plans to cede strategic control over struggling dialysis group Fresenius Medical Care.

The move comes after activist investor Elliott Investment Management took a stake in Fresenius last year, sparking speculation it might push for a break-up of the company.

UK lender Lloyds Bank fell after it reported reported flat annual profit.

Carmaker Stellantis shares gained almost 3% as the company said operating profit grew 17% in the second half of last year.

Shares in Spanish utility Iberdrola fell, despite the company saying it expects net profit to grow this year.

Primary Health Properties was up after reporting modest growth in its full-year rental income and profits but sounding a confident note on its longer-term prospects.

Reporting by Frank Prenesti for Sharecast.com