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The
pan-European STOXX 600 index fell 2.1%, giving up most of its
gains amassed in the last two sessions when hopes of progress in
Russia-Ukraine peace talks had lifted sentiment.
European miners slumped 3.7% and oil & gas stocks dropped 2.9%,
as crude prices shed almost 5% and industrial metals fell on
concerns over demand from key consumer China following a surge
in COVID-19 cases. [O/R] [MET/L]
"Sectors exposed to China - basic materials, mining and metals,
residential construction and luxury stocks - are moving partly
on the restrictions put in place in some parts of China," said
Nick Nelson, a European equity strategist at UBS.
"It's another thing for the markets to worry about in terms of
impact on economic growth and demand for European companies
selling into China."
French luxury goods makers LVMH, which draws a major part of its
revenue from China, fell 3.8%, making it the biggest drag on the
STOXX 600.
Dutch tech investor Prosus, which has a stake in China's Tencent,
fell 10.1%, hitting a record low, amid continued weakness in
Chinese tech shares.
The Federal Reserve is widely expected to kick off a rate hiking
cycle on Wednesday with a 25 basis point rise as market
participants ramp up bets on how far U.S. rates might climb in
the face of surging inflation.
The Bank of England is also set to hike borrowing costs on
Thursday.
Among other stocks, Sweden's H&M, the world's second-biggest
fashion retailer, slipped 3.6% after reporting a rise in
quarterly sales that was in line with expectations.
Tobacco and nicotine products maker Swedish Match slumped 8.1%
after it said it had decided to pause plans to spin off and list
its U.S. cigar business.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Subhranshu
Sahu)
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