European stocks close sharply lower as energy prices lift inflation risks

European stocks closed sharply lower on Wednesday as the ongoing surge in energy prices reinforced concerns that inflation could dent demand and push the ECB toward multiple rate hikes this year. 5% to 640. Strikes between the US and Iran intensified halfway through the week and pushed back expectations for when fuel exports through the Middle East may be somewhat normalized. Brent crude passed $100 per barrel, while regional natural gas benchmarks rose to their highest since 2022.

The ECB is due to raise rates by 25bps tomorrow and could give hints on whether it sees more tightening as warranted. Rate-sensitive sectors declined sharply, with Santander, ING, Deutsche Bank and Allianz dropping 2% on risks to credit demand. Industrials also fell, with Schneider Electric, Siemens, Rheinmetall and Safran falling more than 3%.