European stocks fall on ECB fears, geopolitical tensions

European stocks weakened on Thursday as investors reacted to the prospect of an early interest rate rise by the European Central Bank (ECB) and lingering uncertainty in the Middle East. The pan-European STOXX 600 index fell 0.6 per cent to 583.8 points, on course to snap a three-day run of gains.

ECB policymaker Joachim Nagel said a rate rise in April was realistic. At the same time, ECB President Christine Lagarde stressed the bank’s readiness to act to keep inflation at two per cent. Expectations of tighter policy were also reflected in rising short-term bond yields.

Markets were also weighed down by uncertainty surrounding the conflict in the Middle East, amid conflicting signals from the US and Iran. Higher oil prices hit the tourism sector, while industrial and banking stocks also declined.

Among individual stocks, H&M shares fell after weaker sales, while UK retailer Next rose on an improved earnings outlook.

(reuters, bak)