European Stocks Close Weak On Rate Hike Fears, Virus Concerns

European stocks ended notably lower on Monday as worries about surging cases of the Omicron variant of the coronavirus, and increasing uncertainty about interest rate hikes dampened sentiment and triggered heavy selling at several counters.

According to reports, the overall number of coronavirus cases is fast approaching 307 million with the spread of the Omicron variant of the virus across the globe.

The first U.S. rate hike could be in March, with Goldman expecting the Fed to raise borrowing costs at least four times by the end of 2022 versus the previous prediction of three rate hike.

Rising Treasury yields weighed as well on stocks. The yield on U.S. benchmark 10-year Treasury note has been rising consistantly amid a more hawkish tone from the Fed, as the minutes of the bank's latest meeting indicated it plans to accelerate monetary policy normalization.

Investors looked ahead to upcoming inflation data from the U.S., and a Senate hearing on Fed Chair Jerome Powell's renomination.

The pan European Stoxx 600 declined 1.48%. The U.K.'s FTSE 100 shed 0.53%, Germany's DAX ended down 1.13% and France's CAC dropped 1.44%, while Switzerland's SMI ended lower by 1.57%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finalnd, Iceland, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain and Sweden ended with sharp to moderate losses.

Greece and Turkey bucked the trend and closed higher.

Spirax-Sarco Engineering Plc, down 6.5%, was the biggest loser in the U.K.'s FTSE 100 index. Ashtead Group declined nearly 6%, while Experian, Persimmon and Halma shed 5 to 5.4%.

Scottish Mortgage, Barratt Developments, Croda International Group, RightMove, Dechra Pharmaceuticals, Ferguson, Berkeley Group Holdings, Royal Mail, Evraz, Bunzl, 3I Group and Kingfisher ended lower by 3 to 5%.

Vodafone Group, BAE Systems, Coca-Coal HBC and HSBC Holdings gained 2 to 2.5%. British American Tobacco, Smith & Nephew, Associated British Foods and Hargreaves Lansdown also ended notably higher.

In the German market, Sartorius plunged more than 7%. HelloFresh, Brenntag, Merck, Infineon Technologies, Siemens Healthineers, Deutsche Post, Deutsche Telekom, Puma, Siemens and Covestro shed 2 to 5%.

Bayer, Fresenius, Fresenius Medical Care and Henkel moved up 1.6 to 2.7%. BMW gained more than 1.5% after Goldman Sachs upgraded the rating on the stock.

In Paris, Atos plunged nearly 17%. The technology consulting company issued its second profit warning in seven months, citing delays in customer deals and pressured margins at its hardware and software resales unit.

WorldLine, Hermes International, Schneider Electric, STMicroElectronics, L'Oreal, Legrand, Carrefour, Valeo, Kering and CapGemini shed 3 to 5.4%.

In economic news, Eurozone investor confidence unexpectedly improved in January, after easing sharply in the previous month, survey results from the behavioral research firm Sentix showed Monday.

The headline index climbed to 14.9 from 13.5 in December. Economists had forecast a weaker score of 12.0.

The German investor confidence index improved in January, rising to 17.0 from 14.4 in the previous month. That was the first increase in five months.

Euro area jobless rate continued to fall in November, in line with economists' expectations, preliminary figures from the statistical office Eurostat showed. The seasonally adjusted jobless rate dropped to 7.2% from 7.3% in October. The EU unemployment rate eased to 6.5% from 6.7%.

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