Europe ends sharply down despite oil jumping 5%; banks tumble

European equities closed firmly in the red on Wednesday; as a sharp rise in oil prices failed to relieve any stress from the markets.

The pan-European STOXX 600 fell sharply lower but came off session lows, finishing down 1.5 percent respectively.

All major European bourses ending trade lower, off between 1.3 to 1.5 percent. Almost all sectors finished in negative territory.

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In Asia, stocks finished sharply lower on Wednesday, after Wall Street sold off as much as 2 percent on Tuesday. Two consecutive sessions of declines in oil prices have erased most of last week's four-day gains and was partly responsible for the drop in equities.

In other Asia news, Bank of Japan Governor Haruhiko Kuroda said the central bank has ample room to expand stimulus further and is prepared to cut interest rates deeper into negative territory, Reuters reported.

Despite fluctuations in the oil market, U.S. crude and Brent both traded up around 5 percent or more at Europe's close, after the U.S. dollar weakened. This move in the greenback helped offset worries surrounding the EIA report, which said U.S. crude stockpiles had risen by 7.8 million barrels in the previous week. Brent last stood at Europe's close around $34.29 a barrel, while U.S. oil was around $31.42.

This bounce back in oil prices, however, failed to boost every oil and gas stocks, with the sector closing mixed. But mining stocks rose following a sharp rise in metal prices, with Anglo American closing up 8.5 percent.

U.S. equities came under pressure on Wednesday with investors digesting the latest moves in oil and a mixed set of data.

Syngenta-ChemChina deal; Luxury stocks eyed

In deal news, Swiss agricultural chemicals giant Syngenta said it was to be acquired by ChemChina, in a deal that marks the largest attempted overseas acquisition by a Chinese firm. Syngenta said the deal, worth over $43 billion, is equivalent to 480 Swiss francs ($471.38) per share. Syngenta posted sharp gains, however pared to close up just 2.7 percent.

On the earnings front, LVMH, the world's biggest luxury group, said on Tuesday that fourth-quarter sales had recovered after the Paris attacks, as the French luxury giant saw strength in Europe, Japan and the U.S. offset weakness in China, pushing shares 4.5 percent higher by the close.

The news also pulled other luxury stocks higher, with Christian Dior being one of Europe's top performer, finishing up around 5 percent.

Swiss watchmaker Swatch was off 1.4 percent after it reported a slump in net profit, blaming strong exchange rates.

Danish insulin maker Novo Nordisk lowered its target for long-term profit growth as fourth quarter operating profit slightly missed analysts' expectations, sending shares tumbling 7.6 percent.

Europe's worst performer was Fortum, who saw shares tank over 13 percent, after the utilities firm reported disappointing fourth quarter earnings.

Italian banks hammered

Europe's worst performing sector, banks, delivered a slew of stock news on Wednesday. Spain's BBVA said net profit jumped 36.4 percent in the fourth quarter from a year earlier to 940 million euros ($1 billion), thanks to a fall in provisions for bad loans, but shares were off more than 2 percent.

In Italy, Banca Monte dei Paschi di Siena (BMPS) was down 6.7 percent by the close as continued chatter around potential tie-ups continue. Italian newspaper La Stampa reported that BMPS could be sold off in pieces, according to Reuters.

Worries over the bad loan portfolio of Italian banks dragged Banca Popolare di Milano down as much as 9 percent, before paring losses to close down 5.7 percent. Banco Popolare was off some 10 percent after Citigroup cut its price target for the stock.