European stocks slid further into the red by midday as investors fretted about the impact of further sanctions on Russia after allegations of civilian killings by its troops in Ukraine and hawkish comments overnight from US Federal Reserve officials.
The pan-European STOXX 600 index slumped 1% with all major regional bourses lower. Comments on Tuesday from US Federal Reserve governor Lael Brainard and Mary Daly of the San Francisco Fed expressing worries over inflation ahead of meeting minutes to be released Wednesday, also concerned investors.
Brainard said she expected a rapid rundown of the Fed’s balance sheet combined with raft of interest rate rises this year, which indicated inflationary pressures were weighing more heavily on the central bank.
“While investors have been expecting the Fed to do something about inflation, it is the likely pace of action that really worries the market. Tighten monetary policy too quickly and the economy could fall into recession,” said AJ Bell investment director Russ Mould.
“Fears about the strength of the economy in U.S. naturally led investors to worry about the state of other geographies.”
Germany’s DAX was down 1.5% as data showed industrial orders fell more than expected in February on weaker overseas demand as supply shortages, spiralling energy prices hit manufacturing activity.
In equity news, shares in Danish wind turbine maker Vestas fell after the company said it would withdraw from Russia.
Shares in Imperial Brands rose as the company said it had made “good progress” in its strategic objectives this morning despite a weaker tobacco performance in Europe.
