Europe close: Stocks slip and volatility spikes due to uncertainty on US rates

European shares slid on Thursday following the release of a batch of hotter-than-expected US economic data.

On top of that, the minutes of the Federal Reserve's last policy meeting, which had been released overnight, showed that rate-setters in the States were divided when they last met and decided to skip a rate hike.

"Fears over higher rates and slower growth has tipped the FTSE100 to its worst day since the big sell-off in March, as well as its lowest levels since then, as well as clobbering the FTSE250, with weakness manifesting itself across the rest of European markets, after last night’s Fed minutes showed that the decision to pause rate hikes wasn’t the cut and dried decision that many thought it was," said Michael Hewson, chief market analyst at CMC Markets UK.

The pan-European Stoxx 600 index finished down by 2.34% at 447.22 with all major regional left nursing similar hefty losses.

Amid the declines, the VStoxx gauge for volatility on the EuroStoxx 50 spiked 26.19% to 19.34.

On 16 June the gauge had plumbe a 52-week low at 13.07.

Four economic reports published earlier on Thursday had pointed to greater-than-expected resilience in the US jobs market, although some economists were wary of reading too much into the data.

Closer to the Continent, data showed German industrial orders rose significantly more than expected in May, due to large scale orders of ships, spacecraft and military vehicles.

In equity news, Ocado shares fell after Morgan Stanley lowered its price target and estimates ahead of the UK online grocer’s first-half results. The broker said that recent share-price strength has been surprising and lowered its price target to 390p from 430p. The shares closed at 573.4p on Wednesday.

British electricals retailer Currys slumped after reporting a 38% fall in full year profit and pulling its final dividend.