Europe midday: Stocks extend losses, with miners under the cosh

European stocks extended losses as investors digested the release of hawkish Federal Reserve minutes, with basic resources under the cosh as the dollar gained ground.

At midday, the benchmark Stoxx Europe 600 index was down 0.7%, France’s CAC 40 was off 0.9% and Germany’s DAX was 1.2% weaker.

At the same time, oil prices were lower as the greenback gained ground on US rate hike expectations. West Texas Intermediate fell 2% to $47.24 a barrel and Brent crude was down 2.4% to $47.77.

Basic resources also took a hit from the stronger dollar, which makes dollar-denominated commodities more expensive for holders of other currencies. The Stoxx 600 sub-index for the sector slumped 3.2%.

“The Fed has put the market on notice for June, and for the moment the market doesn’t like it,” said Chris Beauchamp, senior market analyst at IG.

“The rug has been pulled from underneath European markets, with the news of the EgyptAir tragedy having an impact on airline and travel names. It is important to note that indices on both sides of the Atlantic are, for now, just testing the bottom end of their recent range, so it is not all going the way of the bears just yet, but there is now the very real risk that a poor finish to the week could set off a correction to rival January and February in its intensity.”

Minutes from the latest Federal Open Market Committee released on Wednesday revealed that an interest-rate hike in June was a possibility, with a number of participants already angling for a hike at the April meeting.

The key phrase in the minutes was that “most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labour market conditions continuing to strengthen, and inflation making progress toward the Committee’s 2% objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June."

Airlines and travel and leisure stocks took a hit on reports that an EgyptAir plane carrying 66 passengers on a flight from Paris to Cairo had crashed off the Greek island of Karpathos.

Shares in Thomas Cook tanked after the FTSE 250 tour operator said it expects underlying earnings for the year to be at the lower end of market views, and with sentiment towards the sector dented by EgyptAir news.

French oil services firm Technip surged after announcing an all-stock merger with US-based FMC Technologies.

Drug and chemicals group Bayer slumped after making an unsolicited takeover offer for US seed company Monsanto.

Henkel nudged lower despite posting an increase in first-quarter profit.

Royal Mail was under pressure despite reporting a better-than-expected profit for the year, as it warned the market remained challenging.

On the economic calendar, the latest European Central Bank minutes are due at 1230 BST. In the US, the Philadelphia Fed survey, Chicago Fed activity index and initial jobless claims are at 1330 BST. Leading indicators are at 1500 BST.