Mar 15, 2022 05:56AM ET
European stocks dropped more than 2% on Tuesday, with the loss led by commodity sectors, as fears of a surge in coronavirus cases in China added to jitters ahead of a widely expected US interest rate hike.
The pan-European STOXX 600 index was down 2.1%, giving back most of its profits from the previous two sessions, as hopes of progress in peace talks between Russia and Ukraine improved sentiment.
Stocks of European miners slumped 3.7% and stocks of oil and gas companies 2.9% as oil prices declined nearly 5% and industrial metals slipped on worries about demand from top consumer China after a steep increase in cases of COVID-19 disease.
French luxury goods maker LVMH, which gets much of its revenue from China, fell 3.8%, becoming the largest drag on the STOXX 600 index.
Dutch technology investor Proses, which holds a stake in Chinese company Tencent, declined 10.1%, reaching a record minimum against the backdrop of ongoing softness in Chinese technology stocks.
The U.S. Federal Reserve is widely anticipated to start its interest rate hiking cycle on Wednesday with a 25 basis point rise, as market participants increase bets on how far U.S. interest rates will be boosted amid surging inflation.
The Bank of England will also increase borrowing costs on Thursday.
In other shares, stocks of Sweden's H&M, the world's second-largest fashion retailer, declined 3.6% ater reporting a quarterly sales rise that matched estimates.
Tobacco and nicotine products maker Swedish Match fell 8.1% ater the company said it had postponed plans to spin off and float its US cigar division.