European stocks closed sharply lower on Thursday as surging energy prices heightened concerns about further interest rate hikes in the euro area and investors digested a fresh round of corporate earnings. The Euro STOXX 50 dropped 1.7% to 6,210, while the STOXX Europe 600 lost 1.3% to finish at 638.
UniCredit slid 4.8% despite reporting a strong quarterly performance, with sentiment hit by worries that its pursuit of Germany's Commerzbank could undermine its share buyback plans. BNP Paribas retreated 2.8% even after beating profit forecasts, in line with broader weakness in the banking sector amid tighter financial conditions.
The ECB left interest rates unchanged, as widely anticipated, but indicated that upside risks to inflation could justify additional rate increases ahead. Those concerns were reinforced by a sharp jump in natural gas prices, as an escalation in the US–Iran conflict further disrupted tanker traffic from the region.
Luxury stocks also came under pressure, with LVMH, Hermès, and Ferrari all falling more than 3.5%, dragged lower by disappointing results from Moncler.
