Europe close: Stocks slump as headlines around peace talks turn more downbeat

European shares finished on a mixed note on Thursday as investors digested interest rate hikes by the Federal Reserve and Bank of England and more downbeat assessments of the prospects for a deal to end the war in Ukraine.

"Like central banks, investors are aware of the rocky global outlook, made worse by the war in Ukraine, and are still nervous about how the downturn in expected GDP growth will hit earnings," said IG chief market analyst Chris Beauchamp.

Dampening recent bullish sentiment in financial markets, Kremlin spokesman, Dmitry Peskov, said that a Financial Times report of "significant" progress having been made in peace talks by Kyiv and Moscow was "wrong".

The pan-European Stoxx 600 index added 0.45% to 450.49 but by the end of trading the German Dax had flipped into the red by 0.36%, finishing at 14,338.06.

Asian shares were up again overnight after China's promise of stimulus measures to support its economy. Hong Kong’s Hang Seng index surged 7%.

In London, the Bank of England raised interest rates by 0.25 points to 0.75%, marking the first that Bank has raised interest rates at three successive meetings since 1997.

The US Federal Reserve increased rates by a quarter point overnight, as expected, and indicated rises at every meeting for the remainder of this year.

Oil prices were also showing volatility after the International Energy Agency said markets could lose three million barrels per day of Russian crude from April and UK Prime Minister Boris Johnson failed to persuade Saudi Arabia and the United Arab Emirates to lift production.

Talk of Chinese economic stimulus in the pipeline was likely also playing a hand, helping to push Brent crude oil futures up by 8.64% to $106.49 per barrel on the ICE.

Euro/dollar climbed 0.76% to 1.1119.

In equity news, shares in Germany's Thyssenkrupp fell 9% after the company suspended its 2021/22 forecast for free cash flow before mergers and acquisitions due to the Ukraine crisis, and said it was unclear if it would still be able to spin off its steel division.

Ocado shares dropped 8% as the online grocer said retail revenue fell in the first quarter of 2022 and warned about uncertainty caused by the rising cost of living.

Deliveroo shares were up 6% despite a wider annual loss as spending on marketing and technology more than offset higher revenue at the food delivery group.