Europe open: Stocks drop as markets reassess Fed, Greek banks under spotlight

Stocks on the Continent have started the session lower weighed down by a very positive assessment of the US economy from the head of its central bank that triggered a big move higher in US bond yields overnight and pushed the euro sharply lower.

Greek debt markets were also in the spotlight, albeit for different reasons.

In remarks to Bloomberg TV, Fed chairman, Jerome Powell, defended that a gradual path of interest rate hikes was the best way to move forward but also said America was experiencing "a remarkably positive set of economic circumstances."

But what really got traders worked-up was his remark that "we're a long way from neutral at this point, probably."

Nevertheless, four other top Fed officials who also made policy-relevant remarks on Wednesday evening had sounded a more mixed set of views.

Against that backdrop, as of 1004 BST, the benchmark Stoxx 600 was down by 0.78% or 2.99 points to 380.86, alongside a drop of 1.02% or 54.85 points to 5,436.55 for the Cac-40 and a retreat of 0.8% or 100.19 points to 20,637.7 on the FTSE Mibtel.

One bright spot however were lenders' shares, with the corresponding Stoxx 600 sector gauge gaining 0.30% or 0.46 points to 155.23.

In parallel, euro area government debt markets were reacting calmly - outside of Greece - to the ructions in US debt markets overnight, with Italian and Spanish 10-year government notes trading only slightly lower, although they did come under greater selling pressure at the opening bell.

Greek 10-year bond yields on the other hand were up by 16 basis points at 4.57%. On Monday, Athens lifted the restrictions on bank withdrawals which had been imposed in 2015.

To take note of, on Thursday an advocate general of the European Court of Justice was expected to issue an opinion on the legality of the European Central Bank's Public Sector Purchase Programme in the form of a non-binding statement, analysts at UniCredit Research pointed out.

For later in the day, markets will be keeping an eye out for the latest weekly jobless claims figures Stateside, at 1330 BST, followed by factory orders figures at 1500 BST.

ECB governing council member Ewald Nowotny was set to deliver a speech on financial market development, in Vienna, at 1430 BST.

On the corporate front, Banca Monte dei Paschi di Siena is in talks to sell its Belgian arm to Warburg Pincus, Bloomberg reported citing people familiar with the matter.