2026.03.1916:56:25UTC+00European Stocks Close Sharply Lower

European equities closed sharply lower on Thursday amid another surge in key energy prices and increasingly hawkish signals from major central banks. The Eurozone’s STOXX 50 fell 2.1% to 5,616, while the pan-European STOXX 600 dropped 2.4% to 584, both hitting their lowest levels this year.

European natural gas and power prices soared after Iran struck Qatari and Saudi energy infrastructure, prompting the US to threaten Iranian gas fields. This month’s spike in energy costs led the ECB to leave interest rates unchanged but revise its inflation forecasts higher, with markets now pricing in two rate hikes this year, a stark shift from expectations of a cut just last month. The ECB’s stance aligned with hawkish signals from the BoE and the SNB, which also held rates.

Bank stocks sold off sharply as higher inflation expectations weighed on sovereign bonds, with UniCredit, ING, Santander, and Intesa Sanpaolo all losing more than 4%. Industrial names were also under pressure, with Schneider Electric, Safran, and Airbus each falling around 3.5%.