European Shares Set To Extend Losses On Risk Aversion

(RTTNews) - European stocks look set to extend losses from the previous session on Thursday as rallying oil prices and a rout in the bond markets clouded the outlook for interest rates and economic growth. Heightened geopolitical risks may also keep investors wary.

The dollar firmed tracking a spike in Treasury yields after Fed Bank of New York President John Williams said interest rates need to be restrictive "for some time" to bring inflation back to the 2 percent target.

Separately, Fed Governor Christopher Waller noted that it's too soon to say if more policy action is needed.

Fed Chair Jerome Powell is likely to give more clues about inflation and interest rates during his speech at the Economic Club of New York later in the day.

China concerns remain in focus after the U.S. tightened rules on AI chip sales to China and property developer Country Garden said it was unlikely to be able to meet most of its upcoming offshore debt payments, putting it at risk of default.

Asian markets were deep in the red as an escalation in the Israel-Hamas conflict spurred concerns over a wider conflict in the region.

A day after U.S. President Joe Biden paid a solidarity visit to Israel, British Prime Minister Rishi Sunak is set to visit the country to discuss the country's war with Hamas.

Iran urged Muslim countries to sanction Israel amid an emergency meeting of members of the Organization of Islamic Cooperation (OIC) to discuss the escalating Israeli-Palestinian conflict.

Gold held near two-month highs on safe-haven demand after the cancellation of a summit between U.S., Egyptian and Palestinian leaders. Crude prices slipped after rallying almost 2 percent in the previous session.

The European economic calendar remains light, with business confidence data from France and current account figures from the euro area awaited later in the day.

U.S. stocks tumbled overnight as a combination of rising Middle East tensions, rallying oil prices and higher bond yields dented investors' appetite for risk.

A string of upbeat earnings reports and data showing a sharp rebound in housing starts failed to lift sentiment.

The Dow dropped 1 percent, the S&P 500 slumped 1.3 percent and the tech-heavy Nasdaq Composite plummeted 1.6 percent.

European stocks fell sharply overnight after a deadly missile attack on Al-Ahli Baptist Hospital in Gaza derailed the diplomatic efforts led by the U.S. to reduce tensions in the region.

The pan European STOXX 600 lost 1.1 percent. The German DAX gave up 1 percent, France's CAC 40 shed 0.9 percent and the U.K.'s FTSE 100 declined 1.1 percent.