Europe midday: Shares slip further as Swiss, Norway, UK rates all rise
European shares extended losses on Thursday after the US Federal Reserve quarter-point rate rise was followed by a trio of increases in the UK, Switzerland and Norway.
The pan-regional Stoxx 600 index was down 0.67% at midday with all major bourses lower.
The Bank of England raised interest rates by a quarter of a percentage point to 4.25% in response to higher than expected domestic inflation - marking the 11th consecutive increase.
In Switzerland, the National Bank hiked its key policy rate on Thursday for the fourth meeting in a row, by 50 basis points to 1.50%, in line with consensus expectations.
It said it was looking to tackle "the renewed increase in inflationary pressure" and that further rate hikes could not be ruled out to ensure price stability in the medium term.
Norway’s central bank raised its benchmark interest rate by 25 basis points to 3.0%, in line with expectations. The bank also said it would likely increase them again in May, with the cost of borrowing now on track to reach 3.5% by the summer.
Remarks from US Treasury Secretary Janet Yellen overnight that she is not considering "blanket insurance" for deposits, also weighed on sentiment.
“While investors have been relieved that this week has brought no new instability in the banking sector (yet), they are a little concerned by what they heard from the Fed and Treasury Secretary Janet Yellen yesterday,” said OANDA analyst Craig Erlam.
“(Fed chief) Jerome Powell and his colleagues are clearly concerned about the impact of recent events on credit conditions which may impact lending to households and businesses, slow the economy, and weigh on inflation. While this would do some of its job for it, in bringing inflation back to target, it won't do so in the way that it will have wanted.”
“What's more, the risks of further fallout have left investors nervous and while the Fed is not pricing in any rate cuts this year, markets very much are. We may not see those risks reflected in Fed forecasts and the dot plot but they are evident in the language used, as they were with the European Central Bank last week.”
In equity news, construction software vendor Nemetschek gained after posting higher annual profits.
Zur Rose shares fell after the online pharmacy said it will not reach break-even in adjusted core profit this year.
Jeronimo Martins fell despite fourth quarter profits at the Portuguese retailer increasing 23%.
UK auto distributor Inchcape slumped despite reporting a rise in profit and providing an upbeat outlook.
Reporting by Frank Prenesti for Sharecast.com