Europe close: Banks, Basic Resource stocks drag equity markets lower

European stocks reversed early gains as oil prices turned came under selling pressure, with risk-appetite broadly lower across asset classes as investors focused on the negative narrative of a more gloomy global economic outlook after the latest European Central Bank and Federal Reserve minutes.

The benchmark DJ Stoxx Europe 600 index finished the session down by 0.77% or 2.55 points at 328.10, France’s CAC skidded 0.90%, while Germany’s DAX retreated 0.98%.

A dovish set of US Fed minutes appeared to trigger buying in Japan's yen, which by the afternoon was trading near its strongest levels versus the US dollar since about 18 months ago.

“No doubt there was some disappointment that in a speech overnight BOJ governor Haruhiko Kuroda said nothing new about Japan’s economic outlook for monetary policy.

"But the real fear is that Japan’s policymakers are losing control of the situation and will be unable to counter the yen’s rally,” said SpreadCo analyst David Morrison.

The Fed minutes revealed that policymakers discussed the possibility of a rate hike in April but the overall consensus was that the risks from a global economic slowdown meant a cautious approach was needed.

Capital Economics said: “Although the minutes acknowledge that a few officials were ready to raise interest rates in April, many thought that the Fed should proceed more cautiously, in particular because of worries about global downside risks.

For their part, a bevy of top ECB officials weighed in on Thursday with their views on monetary policy.

Speaking from Frankfurt, ECB vice-president Vitor Constancio said the monetary authority was ready to do "whatever is needed" to reach its inflation target.

Acting as a backdrop, West Texas Intermediate surrendered 2.23% to $38.95 a barrel and Brent crude was off by 2.22% to $36.93.

They were under pressure again after an official from the state-run South Oil Company in Iraq said exports from the country’s southern ports have risen to an average of 3.494m barrels per day in April from 3.286m in March.

Spanish 10-year bond yields rose for a sixth consecutive day - increasing by one basis point to 1.5222% - whih was their longest streak since July 2012

In corporate news, London-listed pharmaceutical company Shire was on the front foot after expressing confidence that its takeover of US-based Baxalta will proceed as planned even with new rules from the US Treasury to block ‘tax inversion’ deals.

Peers GlaxoSmithKline and AstraZeneca were also higher as investors bet they might become bid targets following the collapse of the Pfizer-Allergan deal.

Retailer Marks & Spencer was also in the black after it posted a mixed fourth quarter update that beat analysts’ expectations.

Payments processor Wirecard gained after reporting a 32% increase in full year profit, while telecoms company Numericable-SFR advanced after announcing a successful placing of senior secured notes.