European shares dragged by miners, real estate; rate hike worries linger

GERMAN: European shares fell on Thursday, with real estate and mining stocks leading declines, as investors grew increasingly worried about the prospects of interest rates staying higher for longer.

The STOXX 600 index dropped 0.4%, after closing higher in the previous session likely buttressed by Federal Reserve Chair Jerome Powell's comments that the U.S. central bank had not yet decided on the size of this month's rate hike. However, worries remained as recent stronger-than-expected U.S. data has added to a growing pile of evidence that the Fed will have to keep raising rates to control sticky inflation.

The European Central Bank will be in focus next week, when it is expected to hike its key lending rate by 50 basis points amid numerous policymakers calling for the central bank to keep hiking rates in subsequent meetings. "Up to now, the ECB has been surprisingly unanimous on rate hikes ... Recent comments by ECB officials, however, suggest that the debate at the ECB will become more heated again," Carsten Brzeski, global head of macro at ING, said in a client note.

"The publication of a new round of macro projections at next week's meeting will do little to change the actual rate decision but will give clear insights into where the discussion within the ECB about future rate hikes is heading to." Real estate stocks were down 1.7%, with shares of Germany's LEG Immobilien tumbling 8.8% as the real estate firm suspended its dividend.

European miners slid 1.7% after prices of copper fell as the dollar hovered near a three-month high. Hugo Boss fell 2.2% after the German fashion house said it expected 2023 sales to grow slower than last year.

Credit Suisse Group AG shed 3.7% after the lender delayed publishing its annual report due to the U.S. market regulator raising questions about earlier financial statements. Deutsche Post reversed early declines to rise 1.2% as it hiked its dividend for 2022 after a record year but warned of a challenging year ahead.

Shares of French aircraft manufacturer Dassault Aviation soared 10.5% to a record high after reporting better-than-expected results for 2022. Investors will now look out for the weekly U.S. jobless claims numbers, before the comprehensive monthly employment report on Friday.