(Reuters) – European equities widened losses on Thursday after the European Central Bank (ECB) raised borrowing costs as expected and signaled more policy tightening in its battle against stubborn inflation.
The continental STOXX 600 index was down 0.6% by 1230 GMT.
The ECB raised the deposit rate by 25 basis points to 3.5%, the highest level in 22 years. This was the central bank’s eighth consecutive hike. Eurozone inflation stands at 6.1%, more than three times the ECB’s target of 2%.
Attention now turns to ECB President Christine Lagarde’s press conference at 1245 GMT.
“No surprise,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank in Switzerland.
“The devil will be in the press conference: will the ECB maintain its aggressive stance despite declining inflation and a deteriorating economic outlook, or will the bank soften its hand?”
This comes just as the US Federal Reserve left interest rates unchanged on Wednesday, but raised at least half a percentage point overall by the end of this year.
The euro STOXX volatility index, an equivalent of Wall Street’s so-called fear gauge VIX, briefly fell to its lowest point since the outbreak of the COVID pandemic in 2020.
Markets look to more economic data and updates from major central banks to help the STOXX 600 break out of the 1% trading range it has been stuck in for nearly two weeks.
The price-sensitive technology sector index lost 1.7%, while stocks in basic resources fell 1.5%.
Miners followed a fall in base metal prices in London on poor economic data from China’s top metals consumer.
H&M rose 3.2% after the Swedish clothing group said June had started well.
British tech company Halma was down 4.7% as its annual margin outlook was disappointing.
Shares of SoftwareOne rose 18.6% after Bain Capital Private Equity made a bid for the Swiss software management company, valuing it at 2.9 billion Swiss francs ($3.21 billion).
Informa Plc rose 2.4% after raising its annual profit and revenue forecast.
Reporting by Shreyashi Sanyal and Bansari Mayur Kamdar in Bengaluru; Edited by Dhanya Ann Thoppil and Devika Syamnath