BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks closed lower on Thursday, weighed down by economic concerns after the Bank of England warned of recession risks, and tracking a sell-off in the U.S. market.
The Bank of England today decided to hike its key rate by a quarter-point to a 13-year high as policymakers try to bring inflation, which is now expected to peak above 10% this year, back to the target.
The nine-member Monetary Policy Committee, led by Governor Andrew Bailey, raised the key bank rate to 1% from 0.75%, and judged that some degree of further tightening in monetary policy may still be appropriate in the coming months.
The BoE announcement came after the U.S. Federal Reserve had raised its key rate by 50 basis points on Wednesday.
Amid fears of stagflation and the recession warning from the BoE, the British pound plunged to a near two-year low against the US dollar. The BoE expects inflation to peak later in the United Kingdom than in many other economies, and may therefore fall back later.
The bank expects a recession next year due to drags from higher inflation and rising interest rates.
The pan European Stoxx 600 shed 0.7%. Germany's DAX slid 0.49% and France's CAC 40 ended 0.43% down, while the U.K.'s FTSE 100 edged up 0.13%. Switzerland's SMI ended 0.02% down.
Among other markets in Europe, Austria, Czech Republic, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Poland, Portugal, Spain and Sweden ended with sharp to moderate losses.
Belgium, Denmark, Russia and Turkey closed higher.
In the UK market, Hikma Pharmaceuticals plunged more than 9%. Ocado Group and Admiral Group both shed nearly 7%. ITV, Antofagasta, Natwest Group, Lloyds Banking Group, RS Group, Prudential, Rolls-Royce Holdings and Aviva ended lower by 1.7 to 5%.
Aveva Group gained nearly 5%. Mondi climbed 4.3% on strong earnings, and Endeavour Mining ended 4.2% up. Shell moved up sharply after reporting strong earnings.
Avast, Segro, Severn Trent, United Utilities Group, Associated British Foods, Land Securities and Airtel Africa also ended sharply higher.
In the French market, Credit Agricole shed about 2.7% after reporting a sharp 47.2% drop in net profits.
Renault, Valeo, Faurecia, Atos and LVMH lost 3 to 4.1%. Hermes International, AXA, Accor, Vivendi, Safran, Kering and ArcelorMittal ended lower by 2 to 2.7%.
Airbus Group rallied nearly 6% after reporting upbeat results. Air France-KLM climbed 2.5% after the Franco-Dutch carrier narrowed its Q1 net loss and said it expects to report break-even operating income in the second quarter. Legrand surged up 1.7%.
In Germany, Allianz ended more than 6.5% down. HelloFresh, Puma, Continental, Zalando, Deutsche Bank, Adidas, BASF, Munich RE, Covestro, HeidelbergCement, Deutsche Post and BMW lost 2 to 5%.
Sartorius climbed nearly 3.5%. Porsche Automobil, Siemens Healthineers, Vonovia, Fresenius Medical Care, Qiagen and SAP gained 1.5 to 3.4%.
In economic releases, survey results from S&P Global showed the UK service sector expanded at a stronger pace in April although increased costs and the war in Ukraine combined to contain the pace of expansion.
The Chartered Institute of Procurement & Supply final services Purchasing Managers' Index came in at 58.9 in April, which was above the flash score of 58.3 but down from 62.6 in March.
Germany's factory orders declined more-than-expected in March, reflecting the impact of the war in Ukraine on industrial activity.
Factory orders posted a monthly fall of 4.7% in March, data released by Destatis showed. This was faster than February's 0.8% decrease and the 1.1% decline expected by economists.
France industrial production unexpectedly dropped in March, falling 0.5% month-on-month, the statistical office Insee said. That was slower than February's revised 1.2% decrease. However, output was expected to rebound 0.2%.
At the same time, the decline in manufacturing output slowed to 0.3% from revised 0.9%.
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