LONDON: European stock markets were mixed Thursday as investors reacted to the US Federal Reserve's gloomy economic outlook, while Wall Street rebounded on a surge in oil prices.
The US central bank has painted a grim picture of the world's biggest economy but still left open the door for another rate hike in March.
The Fed said US economic growth slowed late last year and that it was concerned about ongoing global weaknesses, in statements Wednesday after its first monetary policy meeting since lifting interest rates in December.
"There is no doubt that the economic outlook has become a little bit gloomier since December so a slightly more cautious statement was to be expected, and that's precisely what we got," said CMC Markets analyst Michael Hewson.
Despite low oil prices and the turmoil that has wracked world markets so far this year, Fed policymakers still foresaw higher inflation. That was seen as keeping the Fed's option open for another rate hike in March.
In Europe, Frankfurt fell 1.18 percent and Paris slide 0.62 percent in mid-afternoon trade.
London's benchmark FTSE 100 was essentially flat off 0.01 percent.
US stocks meanwhile jumped in opening trade Thursday helped by a surge in oil prices after Russia said it would meet with OPEC over the depressed crude market.
Five minutes into trade, the S&P 500 index was up 0.98 percent, the Dow Jones Industrial Average added 0.70 percent, and the Nasdaq Composite 1.33 percent.
Russia's announcement that it could possibly establish "coordination" with the OPEC cartel in reaction to the collapse of the oil market sent crude prices soaring, with Brent crude traded in London topping $36, up nearly 6.0 percent.
The heaviest faller was Milan, where shares briefly tanked by more than 3.3 percent on concerns over Tuesday's agreement between Italy and the European Union to create a "bad bank" vehicle to help Italian lenders sell their bad loans.
"Their banking sector is taking another hit," said analyst Manoj Ladwa at brokers TJM Partners.
"It looks like a bad bank solution for bad loans may not be as popular as previously thought," he told AFP.
"Those banks holding sizable cash reserves will be more resilient to any volatility than those with lower cash levels."
Lender Banca Monte dei Paschi di Siena (BMPS) spearheaded the decline, slumping 5.41 percent in mid-afternoon trading in an overall market down 1.25 percent..
Banca Popolare di Milano stock lost 4.65 percent and Unicredit slid 4.03 percent.
Across in Asia, Tokyo shed 0.7 percent on the eve of the Bank of Japan's latest monetary policy announcement.
The worst performer was Shanghai, which plunged 2.9 percent on worries about the nation's faltering powerhouse economy.
Mainland Chinese investors seemed unmoved by a decision by the People's Bank of China (PBoC) to pump $52 billion into financial markets to ease liquidity problems leading up to the Lunar New Year break.
On the upside, Hong Kong stocks rose 0.8 percent thanks to late buying.
Asian tech suppliers were meanwhile hit hard as South Korean giant Samsung Electronics posted a 40-percent collapse in quarterly net profit, a day after rival Apple recorded its weakest ever rise in iPhone sales.
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