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Europe finishes deep in the red amid mixed earnings, Powell testimony reaction

  • The pan-European STOXX 600 tumbled 1.26 percent by the close, with every sector posting sharp losses.
  • Following comments from Powell on Tuesday, markets have started to price in a higher interest rate path in the U.S., which is set to ultimately impact firms' costs.
  • Shares of WPP closed down 8.3 percent, after the advertising giant announced lower net sales in 2018 and a cautious outlook for 2018.

European equities closed Thursday's session sharply lower.

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The pan-European STOXX 600 tumbled 1.26 percent by the close, with every sector posting sharp losses. During the course of the session, European stocks hit a two-week low, as the volatility seen during February showed signs of seeping into March.

The German DAX sank 1.97 percent by the close, while France's CAC 40 slipped 1.09 percent and the U.K.'s FTSE 100 dropped 0.78 percent.

WPP's nervous outlook sees shares sink 

Media stocks were some of the top losers, off over 2 percent as a sector following earnings news. Shares of WPP fell as much as 14 percent in trade before closing down 8.2 percent. This comes after the advertising giant announced lower net sales in 2018 and a cautious outlook for 2018. Other sectors to post sharp losses included basic resources, chemicals and technology

Another group to issue a cautious outlook for this year was France's Carrefour, with the retailer's shares dropping 6 percent after it posted earnings that failed to match market expectations.

At the other end of the European benchmark, Cobham was a top gainer, jumping 10 percent by the close as it reported a pretax profit in 2017, after having registered a loss in the previous year.

Another top performer was Britain's Merlin Entertainments, which rose 9.4 percent after the attractions group said it had a "record" 66 million visitors worldwide during 2017, up 3.5 percent from 2016. It added that it "remained confident" on the company's long-term prospects.

Sticking with earnings, Peugeot popped 4.5 percent after the company saw net profit increasing in 2017, despite a loss in its Opel unit. AB InBev saw shares rise over 2 percent after reporting a higher than expected profit in the fourth quarter.

In luxury, Luxottica rose over 5 percent after the European Commission approved its 48 billion euro merger with Essilor. Essilior jumped 4.9 percent. Burberry meantime finished the session up 3.8 percent, after the designer said it had tapped Givenchy alumni Riccardo Tisci as its new chief creative officer.

Powell's comments under the radar

Worldwide markets were following a negative trend on expectations of a more hawkish Fed. Following comments from Fed Chair Jerome Powell on Tuesday, markets have started to price in a higher interest rate path in the U.S., which is set to ultimately impact firms' costs.

The recently-appointed chairman captured investor attention again Thursday as he began speaking to the Senate Banking committee, where he discussed monetary policy and the state of the U.S. economy. During the testimony, which continued past Europe's market close, U.S. stocks fell into the red.

The Fed Chair said that there were currently no "decisive" signs of wage inflation. He added that more gains could be seen in the labor market without triggering harmful levels of inflation.

Elsewhere, unemployment numbers in the euro zone dropped to their lowest level in more than nine years in January.

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