Europe close: Banks hammered by wave of selling on Wall Street

European stocks were sharply lower on Friday with banking stocks hammered following a sell-off on Wall Street and Asia overnight, after tech-focused US lender SVB Financial announced plans to raise more than $2bn in capital to help offset losses on bond sales from its portfolio.

"Banks and other financials have led the decline, mirroring the moves seen on Wall Street yesterday," said IG chief market analyst Chris Beauchamp.

"While it looks like this knee-jerk response looks over done, it certainly isn’t wise to stand in the way of the avalanche of selling, which looks unlikely to reach an end soon."

The pan-European Stoxx 600 index fell 1.50% to 453.07 with all major regional bourses registering similarly-sized losses alongside.

In parallel, the Stoxx 600 bank sector gauge plummeted by 3.97% to 159.15.

Helping a bit to steady investors' frayed nerves, the US non-farm payrolls report for February came in ahead of forecasts for hiring but beneath when it came to wage growth.

The result was investors paring back the odds assigned to the risk of a 50 basis point interest rate hike by the Fed at its 21-22 March meeting to 50:50.

In European economic news official data out earlier showed that the UK economy returned to growth in January, raising hopes that a recession will be avoided.

GDP grew 0.3% on the month following a 0.5% contraction in December, coming in ahead of consensus expectations for 0.1% growth.

Meanwhile German inflation was unchanged last month with both energy and food prices remaining high.

According to the Federal Statistics Office, annual consumer price inflation was 8.7% in February, in line with both the initial estimate and consensus, and unchanged on January.

The harmonised index of consumer prices nudged 0.1 percentage points higher to 9.3%, also in line with consensus and earlier estimates.

Investors were also eyeing US payrolls data later in the day along with the unemployment rate and average earnings.