Europe close: Big oil, commodities retreat, banks rise

European stocks took a page out of Wall Street's book on Thursday, tracking losses Stateside following the release of more hawkish-than expected minutes of the US central bank's last rate-setting meeting late in the previous session.

Adding to negative investor sentiment perhaps, US New York Federal Reserve president William Dudley said an interest rate hike at the central bank's meeting on 15 June was possibility, although it was not a foregone conclusion.

Shares of oil and basic resource companies came under pressure as crude and commodity prices registered moderate declines, although a broad measure of the US dollar's trade-weighted value was in fact little changed.

Against that backdrop, the benchmark Stoxx Europe 600 index finished down 1.09% or 3.67 points to 333.91, France’s CAC 40 was down 0.85% or 36.76 points at 4,282.54 and Germany’s DAX surrendered 1.48% or 147.34 points to end the day at 9,795.89.

Front month Brent crude oil futures retreted 1.24% to $48.33 per barrel, alongside a rise of 0.20% in the US dollar spot index.

The DJ Stoxx 600 sub-index for shares of basic resources companies dropped 2.55% or 6.94 points to 265.25, as another gauge for Oil&gas shares lost 2.53% or 6.99 points to 269.11.

Travel&leisure stocks were 1.29% lower for the day following poor first-half numbers of Thomas Cook and the unexplained crash of an EgyptAir flight in the Eastern Mediterranean.

The Stoxx 600 banks sub-index closed 0.33% or 0.33 points up at 100.73.

“The Fed has put the market on notice for June, and for the moment the market doesn’t like it,” said Chris Beauchamp, senior market analyst at IG.

“The rug has been pulled from underneath European markets, with the news of the EgyptAir tragedy having an impact on airline and travel names. It is important to note that indices on both sides of the Atlantic are, for now, just testing the bottom end of their recent range, so it is not all going the way of the bears just yet, but there is now the very real risk that a poor finish to the week could set off a correction to rival January and February in its intensity.”

Minutes from the latest Federal Open Market Committee released on Wednesday revealed that an interest-rate hike in June was a possibility, with a number of participants already angling for a hike at the April meeting.

The key phrase in the minutes was that “most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labour market conditions continuing to strengthen, and inflation making progress toward the Committee’s 2% objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June."

Shares in Thomas Cook tanked after the FTSE 250 tour operator said it expects underlying earnings for the year to be at the lower end of market views, and with sentiment towards the sector dented by EgyptAir news.

French oil services firm Technip surged after announcing an all-stock merger with US-based FMC Technologies.

Drug and chemicals group Bayer slumped after making an unsolicited takeover offer for US seed company Monsanto.

Henkel edged higher after posting an increase in first-quarter profit.

Royal Mail was under pressure despite reporting a better-than-expected profit for the year, as it warned the market remained challenging.