Europe close: Stocks fall from record amid Bitcoin rout (and rally)
European stocks slid from record highs on Wednesday after the People's Bank of China and the European Central Bank took aim at cryptocurrencies, adding to an already modestly risk averse mood.
"The collapse across the entire realm of Cryptocurrencies has many fearful of the economic implications of such capital destruction," said IG senior market analyst Josh Mahony.
"With institutions having taken a more keen role over this latest bull-run, the repercussions of another extended crypto-capitulation could be more widespread compared with 2018."
Combined, those warnings from the PBoC and ECB drove Bitcoin down by 30% at one point before rebounding by as much later in the day.
Against that backdrop, the pan-European Stoxx 600 index fell 1.51% to 436.34, while the German Dax was down by 1.77% at 15,113.56, alongside a 1.58% drop for the FTSE Mibtel to 24,486.69.
Selling was broad-based by sectors, but it was the Stoxx 600's Basic Resources gauge that fared worst, slumping by 4.1%.
Overnight, the People's Bank of China reiterated that financial institutions were prohibited from using crypto for purchases.
It was followed by the ECB which in its monthly Financial Stability Review spoke of exuberance in cryptocurrency markets - a clear shot across the bow for speculators.
Also weighing on the mood, the UK's Office for National Statistics reported that the rate of consumer price inflation rose to 1.5% in the 12 months to April from 0.7% in March, which was a smidgen above forecasts for a print of 1.4%.
Some investors fear price rises may last for a prolonged period of time, forcing central banks to counter with tighter policy thereby lifting borrowing costs. Traders were also waiting for more clues on policymakers’ views on inflation when the US Federal Reserve releases its minutes from the latest policy meeting.
In equity news, shares in plumbing and heating products supplier Ferguson shares bucked the trend after the company reported strong revenue growth of 24.5% in its third quarter, to $5.92bn (£4.17bn), and lifted full-year forecasts.
Miners felt the impact of weaker copper and iron prices with Antofagasta, BHP, Anglo American and Rio Tinto all weaker.