Europe close: Stocks drop as investors digest central bank rate hikes around the world
European stocks fell back as investors digested further interest rate hikes out of the Bank of England, Norwegian central bank and Swiss central bank.
That was on top of the current heightened geopolitical risks and the hawkish tone struck by the US Federal Reserve the day before.
"Today has seen another bout of downside for stock markets throughout Europe and the US, with geopolitical and economic concerns providing a drag on risk assets once again," said IG senior market analyst Josh Mahony.
"On a week dominated by central banks, it was always going to be difficult to envisage a scenario where traders emerge with a positive outlook."
The pan-European Stoxx 600 was down 1.79% to 399.76, alongside a 1.07% decline for Milan's FTSE Mib to 21,799.11 and a 1.84% drop for the German Dax to 12,531.63.
Euro/dollar was little changed at 0.9847 albeit after a volatile day of trading following the Bank of Japan's decision to intervene to keep the yen from weakening.
Ten-year government bond yields across the euro area were modestly higher, tracking gains in those of similarly-dated US debt.
Brent crude oil and Dutch TTF natural gas futures were mixed.
Policymakers around the world, including European Central Bank governing council member, Isabel Schnabel on Thursday morning, have signaled that more pain is to come in an effort to combat soaring inflation – something they had dismissed a year ago as transitory in the wake of the Covid pandemic.
In equity news, banks led the charge as interest rates continued to rise with UniCredit, Banco de Sabadell, Deutsche Bank, Raiffiessen Bank and CaixaBank all higher.
Polymetal shares fell after the Russian gold producer reported lower first half output, swung to a net loss and cut its dividend.
JD Sports Fashion was also sharply lower after posting lower profits and warning the second half could be hit by inflation and supply-chain constraints.
Shares in Finnish energy supplier Fortum were up after it agreed to dump its entire stake in its heavily loss-making subsidiary Uniper to the German government for €500m. Uniper shares were up again after the state-sponsored bailout.