Europe close: Stocks slip as Fed's Powell sounds more hawkish note than expected

European stocks fell after US Federal Reserve Chair Jerome Powell left the door open to faster rate hikes in his testimony before Congress and following weak Chinese foreign trade data.

The pan-European Stoxx 600 dropped 0.77% to 460.60 with another deluge of earnings dumped on traders.

Germany's Dax was also lower, retreating by 0.60% to 15,559.53, while Spain's Ibex 35 gave back 1.05% to 9,411.10.

"A more dovish RBA meeting seemed to provide the appetiser ahead of Powell’s testimony, but the Fed chairman has poured cold water on the rally," said IG chief market analyst Chris Beauchamp.

"The Fed boss now thinks that they will have to go further and faster on rate rises, potentially moving away from the sedate 25bps pace of the last meeting. Investors haven’t given up hope altogether, and as his testimony continues have pared back some of their initial losses and equities remain in possession of most of the ground gained last week."

Chinese exports in January and February fell 6.8%, lower than a year before, while imports plunged by 10.2% compared with expectations of a 5.5% fall.

“This highlights not just sluggish domestic demand, but also that Chinese companies aren’t importing as many materials or parts to manufacture goods destined for overseas,” Streeter said.

In equity news meal kit maker HelloFresh jumped despite a disappointing update.

Zalando retreated even after the online fashion retailer hit the lower end of its full-year target range and unveiled a cautious outlook for 2023.

Italian payments group Nexi slipped as the company confirmed guidance for 2023 and said transaction volumes accelerated in the first eight weeks of this year by 17%.

Equipment rental firm Ashtead advanced after it said full-year results were set to be ahead of its expectations following a strong third-quarter performance, as it highlighted "robust" end markets.

Wood Group surged after saying it was minded to reject a fourth takeover approach from Apollo Global Management at 237p a share as it continues to undervalue the business.