Europe close: Stocks down as ECB joins Fed on rate rises

European markets closed lower on Thursday as investors digested rate rises by the US Federal Reserve and European Central Bank, all while the corporate earnings and trading update deluge continued unabated.

The benchmark Stoxx 600 index finished the day 0.4% lower, with oil prices continuing to slide on worries of a global economic slowdown. Fears persisted about the behaviour and financial stability of US banks as shares of PacWest Bancorp were suspended after another 40% plunge in value to follow Wednesday's 56% decline after reports it was assessing strategic options, including a possible sale.

Investors are fretting about similarities with tech lender Silicon Valley Bank which collapsed in March.

The Federal Reserve lifted rates by an expected 25 basis points, with signs that the cycle of rises may be at an end. On the Continent, the ECB followed suit with an identical increase as it tries to tame inflation in the eurozone.

It noted that the inflation outlook continued to be too high for too long, but lags in policy transmission to the economy were uncertain, so the governing council would continue to act in a data-dependent manner, the ECB said in its policy statement.

It added that headline consumer prices had continued to slow in recent months, but inflation pressures at the core level remained "strong".

"The Governing Council’s future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to the 2% medium-term target and will be kept at those levels for as long as necessary," it said.

In other economic news, German exports fell more than expected in March, with exports to the US down by 10.9% and shipments to China dropped 9.3%, according to official data.

There was also worrying news from China, as the smaller Caixin PMI survey showed a slowdown in manufacturing activity.

On the equities front, shares in THG slumped by almost 18% after research from Bloomberg Intelligence suggested that the e-commerce company is unlikely to close a deal with US private equity firm Apollo Global Management seeing a profitable exit.

THG announced last month that it had received a highly preliminary and non-binding indicative takeover proposal from Apollo. The PE firm now has until 15 May to either announce a firm intention to make an offer or walk away.

But Bloomberg Intelligence said it seems unlikely that THG will accept a takeover bid from Apollo and for the latter to make a return, based on its sum-of-the-parts valuation, which is below any acceptable scenario for THG shareholders.

Shares in oil giant Shell rose as it posted first-quarter adjusted earnings of $9.6bn, beating estimates of $8.6bn.

Budweiser-owner Anheuser-Busch InBev reported core earning of $4.76bn, up by 13.6% from the first quarter of 2022.

Virgin Money fell after reporting weaker first half profits as provisions for bad debts soared.

Car dealer Auto1 gained by 10% as it reported strong first quarter results on Wednesday.