European stocks posted their biggest daily decline in more than two weeks.
This came amid pressure from rising oil prices and corporate earnings that fell short of expectations.
This was compounded by hawkish signals from the European Central Bank regarding monetary policy.
The Stoxx 600 index fell 1.3% to 638.5 points.
It had been trading within a narrow range over the past few weeks.
This decline comes amid ongoing tensions in the Middle East, which are heightening concerns about inflation and rising energy costs.
Although the European Central Bank kept interest rates unchanged,
remarks by ECB President Christine Lagarde reinforced market expectations of a possible rate hike in September.
Klaus Vistesen, chief economist at Pantheon Macroeconomics, explained that the European Central Bank’s decision will depend largely on developments in oil prices and the geopolitical situation in the region.
Meanwhile, Brent crude futures rose to $100 per barrel for the first time since May.
This supported European energy stocks, which rose by 1.54%.
However, pressure was greater on other sectors, as the food and beverage index fell 4.1% after Nestlé shares dropped by about 8%, marking its biggest loss since 1989.
Technology stocks also fell by 2.9%, led by STMicroelectronics, which lost 17.7% following a lower-than-expected revenue forecast.
Meanwhile, BE Semiconductor shares fell 7.3% after announcing its second-quarter results.
Analysts believe that the performance of European stocks in the coming period will remain tied to developments in oil prices and central bank decisions,
As well as global geopolitical conditions.
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