Europe close: Stocks blind sided by ECB, even as Russia-Ukraine talks stall
European shares gave back a large part of the prior session's rally as talks between Ukraine and Russia foreign ministers failed to make any progress and after the European Central Bank surprised investors by announcing a quicker tapering of its quantitative easing in response to inflation.
"Hopes that Wednesday's recovery would be followed by further gains have been dashed for now. Bullish sentiment remains fragile at best, making any longer-term rally a dicey proposition," said IG chief market analyst Chris Beauchamp.
The pan-regional Stoxx 600 index was 1.69% lower to 427.11 with France's CAC-40 down 2.83% at 6,207.20 and Germany’s DAX retreating 2.93% to 13,442-10.
Yields on the benchmark 10-year Italian government bond jumped by 25 basis points after the news to 1.92%.
Euro/dollar fell 0.76% to 1.0992 despite the ECB's decision.
Brent crude oil slipped 1.35% to $109.64 a barrel on the ICE.
High-level talks in Turkey between Russia and Ukraine over Moscow's unprovoked invasion of its neighbour had not made any progress, but both sides pledged to continue discussions.
Meanwhile, instead of pledging to maintain its asset purchase programme or even leaving the door open to more purchases, as economists expected, the ECB said that QE would be wrapped up in the third quarter.
In equity news, the volatile ride of shares in Russian goldminer Polymetal continued. After rallying by 25% in the morning session, they plunged to be down 3% s sanctions begin to bite.
Carlsberg shares slipped after the Danish brewer pulled guidance due to uncertainty about the large Russian market and said it had begun a strategic review of its business in the country.
German fashion house Hugo Boss fell after announcing a temporary halt to its business in Russia but forecast an upbeat 2022.
Portuguese retailer Jeronimo Martins shares declined despite reporting better-than-expected first-quarter earnings.