BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European markets ended sharply lower on Thursday as stocks tumbled following a severe escalation in tensions in the Middle East pushing up oil prices and triggering inflation concerns. A hawkish tone on inflation by U.S. Federal Reserve Chair Jerome Powell hurt as well.
After leaving interest rates unchanged, Powell said in his post-meeting press conference on Wednesday that the U.S. is seeing 'some progress on inflation' but 'not as much as we had hoped.'
Powell warned that 'you won't see the rate cut' if there isn't further progress on inflation because of the broader uncertainty linked to the Middle East conflict and President Trump's tariffs.
Investors also parsed the monetary policy announcements from the Bank of England, the European Central Bank and the Swiss National Bank. All the three banks decided to leave their interest rates unchanged, and warned about inflation risks and possible rate hikes this year.
On the Mid East war front, after Israel bombed Iran's South Pars natural gas fields and oil facilities in Asaluyeh, Tehran retaliated by launching an attack on Qatar's Ras Laffan energy complex, causing extensive damage to the facility.
U.S. President Donald Trump has threatened to blow up the entirety of the South Pars Gas Field at an amount of strength and power that Iran has never seen or witnessed before in the event of further attacks on Qatar.
Brent crude futures moved past $119 a barrel before paring gains, dropping to around $109, still notably higher from previous close.
The pan European Stoxx 600 dropped 2.39%. The U.K.'s FTSE ended 2.35% down, Germany's DAX closed 2.82% down, and France's CAC 40 settled lower by 2.03%, while Switzerland's SMI finished with a loss of 2.4%.
Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Irealand, Netherlands, Poland, Portugal, Russia, Spain and Sweden fell, with their benchmarks losing 1.6%-3.3%.
Türkiye finished with a modest loss, while Norway bucked the trend and closed higher.
Selling was widespread in almost all the markets in the region. Financial, mining, aviation and luxury stocks were among the major losers. Energy stocks managed to find some support thanks to higher oil prices.
In the UK market, Fresnillo and Endeavour Mining lost 7.4% and 7.25%, respectively. Antofagasta closed 5.6% down, Rio Tinto ended nearly 5% down, and Anglo American Plc ended lower by about 4.5%.
Bank stocks Natwest Group and Standard Chartered lost 8% and 6.9%, respectively. Barclays closed 4.4% down, Lloyds Banking Group shed nearly 4% and HSBC Holdings settled lower by 3.1%.
M&G tumbled 7.7%. The global savings and investment company, which manages assets for individuals, institutions, and pension schemes worldwide fell, weighed down by concerns about the impact of the ongoing war in the Middle East.
Barratt Redrow lost 8.45%. Weir Group, Melrose Industries, Rolls-Royce Holdings, Kingfisher, Land Securities, Marks & Spencer, Burberry Group, Easyjet, IAG, Segro, Aviva, British Land, Convatec Group, Standard Life, IMI and Bunzl fell by 4%-6.5%.
BP climbed nearly 5%. Shell failed to hold gains and settled flat.
In the German market, Vonovia tanked more than 12% after reporting lower revenue for the full year. For the 12-month period to December 2025, the company posted a net income of EUR 3.723 billion, compared with a net loss of EUR 896 million last year. Net earnings per share were EUR 4.33 as against the prior year's loss of EUR 1.09 per share.
Infineon shed more than 7%. Continental lost about 6.7%. Commerzbank, MTU Aero Engines, BASF, Siemens Energy, Zalando, Heidelberg Materials, Rheinmetall, Henkel, Adidas, Fresenius, Mercedes-Benz, Siemens, Symrise, Daimler Truck Holding, BMW, Volkswage, Fresenius Medical Care, Porsche Automobil Holding, Bayer, Deutsche Bank and E.ON lost 2%-5%.
In the French market, ArcelorMittal ended down by about 6%. Accor declined sharply after U.S.-based short seller Grizzly Research said it had taken a short position in the stock and made allegations about a lack of safeguards around bookings.
Hermes International, STMicroelectronics, Societe Generale, Kering, Saint Gobain, Schneider Electric, Airbus, Safran, Stellantis, BNP Paribas, Michelin, Legrand, Unibail Rodaco, Pernod Ricard, Capgemini, EssiloLuxottica, Renault and Credit Agricole lost 2%-6%.
Among the gainers, TotalEnergies rallied nearly 5%. Teleperformance gained nearly 3% and Sanofi moved up 2.5%.
In economic news, the U.K. unemployment rate remained unchanged and wage growth eased in the three months to January, the Office for National Statistics said.
The jobless rate held steady at 5.2% in the November to January period. Job vacancies decreased 6,000 to 721,000 compared to the previous three months ending November.
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