Europe close: Stocks slip as central banks surprise with 50bp hikes

Stocks ended lower as the Bank of England surprised markets with a 50 basis point interest rate hike.

"A recession in the UK now seems an inevitability with the Bank of England committed to more rate hikes, and at a faster pace," IG chief market analyst Chris Beauchamp said following the news.

"Everything is now subordinate to the task of getting inflation under control, with heightened recession risk accepted as a necessary evil."

The Stoxx 600 dropped 0.51% to 454.70, alongside a 0.22% decline on the German Dax to 15,988.16 while Italy's FTSE Mib declined 0.72% to 27,410.08.

Front-dated Brent crude oil futures meanwhile were off by 33% at 73.81 and euro/dollar at 1.0955, having faded by 0.32%.

In other central bank news, Norway's central bank surprised with a 50 basis point hike to 3.75% and said it anticipated another hike in August.

The Swiss National Bank went ahead and hiked interest rates by 25bp to 1.75%, as expected.

INSEE's French factory confidence index jumped by two points in June to hit 101, against expectations for a dip to 98.

On the company front, SES shares jumped 8% after calling off talks with Intelsat to form a satellite giant.

In an interview with Bloomberg, Deutsche Bank chief executive officer, Christian Sewing, said that trading revenues should recover in the back half of 2023.

But the lender's shares fell 1.4%.

Volkswagen shares were down 2% on its Capital Markets Day, which brought no surprises but added confidence, analysts at Warburg said, Dow Jones Newswires reported.

The carmaker said it would target a 2027 profit margin of 8-10%, outlined plans to scale technology for the battery-electric vehicle transition and said it would further localise its supply chain in China.