European stocks extend losses as slowdown, rate jitters weigh
global growth and higher crude prices spurring inflationary pressures dented sentiment.
The pan-European STOXX 600 index slipped 0.6% to hit its lowest level in more than a week.
The global mood soured as Brent crude prices jumped to over $90 a barrel on Tuesday after Saudi Arabia and Russia extended their voluntary supply cuts to year end, fuelling worries about persistent price pressures.
While oil prices pulled back slightly, government bond yields continued to rise, with the German 10-year yield surging to a two-week high at 2.65%.
«Energy prices are big inflationary drivers, and just at the time when the price spiral appears to be moving more obediently downwards, high crude prices could cause upset,» noted Susannah Streeter, head of money and markets at Hargreaves Lansdown.
The weak sentiment from August spilled into this month on worries about how long the major central banks will keep interest rates elevated amid fresh signs of weakness in Chinese and European economies.
Investors betting against a European Central Bank interest rate increase next week could be underestimating the likelihood of it happening, the ECB's governing council member Klaas Knot told Bloomberg.
Money market futures imply traders are pricing in only a 33% chance that the ECB will hike rates by 25 basis points at the central bank's Sept.
14 meeting.
Meanwhile, the Fed is widely seen holding rates in the 5.25-5.50% range later this month.
In further evidence of slowing economic growth, data showed German industrial orders fell more than expected in July, pulling back after a sharp gain in the aerospace sector the previous month.
Markets sold off on Tuesday after a raft of survey showed Germany's services sector contracted for the first time
