European markets ended sharply lower on Thursday as fresh concerns over U.S. interest rate hikes and another day of losses in commodity markets dragged on sentiment.
Fed in focus
The pan-European STOXX 600 finished 1.5 percent lower provisionally, with all sectors and major bourses in negative territory. On the week, the STOXX 600 closed even lower down, off 1.9 percent.
European markets ended their trading sessions for the week on Thursday, with major bourses closing for the Easter holiday. U.S. stocks came under pressure too on Thursday, as several Federal Reserve officials raised the prospect of tightening interest rates in April.
While last week's Fed meeting was viewed as dovish, with the central bank saying it would likely increase rates twice this year, officials now appear to be putting an April hike back on the table.
This week, St. Louis Fed President James Bullard was the latest to join a growing chorus of Fed officials who say it's time for the Fed to move. However, according to Reuters he told reporters that he was undecided on whether to push for a rate hike at the Fed's April meeting partly because to the limited amount of data expected before then.
"The change of tone undermines the credibility and consistency of the FOMC's message to the markets at a time when sentiment still remains fragile and emerging markets remain vulnerable to the strength of the greenback," Michael Hewson, chief market analyst at CMC Markets, wrote in a Thursday note.
Asia markets closed mostly lower on Thursday amid fresh declines in oil prices and concerns over a potential Fed hike in April.
Commodity stocks negative
Energy stocks and the basic resources sector were hammered amid a slump in several commodity prices.
Brent crude pared some of its losses to trade at $40.18 at Europe's close, while its U.S. counterpart, WTI crude slipped 1.5 percent, down to $39.21. The decline in prices comes after the U.S. Energy Information Administration said on Wednesday that stockpiles had risen by 9.4 million barrels in the previous week, above analyst expectations.
Continued weakness in metal prices put pressure on basic resources, which was down 1.6 percent as a sector. Anglo American fell over 4 percent at the close, with Glencore, BHP Billiton and Arcelormittal following suit, all closing 1.5 percent or more down.
Italian banks merge
In corporate news, Banco Popolare and Banca Popolare di Milano (BPM) agreed to merge on Wednesday. Banco Popolare said it will carry out a 1 billion euro ($1.1 billion) capital increase. Shares in Banco Popolare slumped 4.8 percent and were halted in trade briefly, while BPM closed down 5.3 percent.
The banking sector as a whole ended over 2 percent lower, with many Italian banks seeing sharp declines, including BMPS and Unicredit, off 5.2 and 2.7 percent respectively.
Meanwhile, shares in U.K. retailer Next slumped over 15 percent after it said 2016 could be the toughest year it has faced since 2008 after reporting a 5 percent rise in pretax profit for 2015. The news dragged down other U.K. retailers including Marks & Spencer and Sports Direct.