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European shares reversed early gains to skid on Thursday, as risks from a hawkish Federal Reserve and Washington’s new sanctions on Russia kept investors on edge, while defensive stocks advanced.

The pan-European STOXX 600 index slipped 0.2%, paring back gains made earlier in the day, after losing 1.5% in their worst session in a month on Wednesday.

All major regions were in the red, while sectors more resilient to economic downturn outperformed, with healthcare jumping 1.4% to a record high, and construction and chemicals adding 0.3% and 0.4% respectively.

Oil stocks led losses, dipping -1.6%, while tech stocks lost -1.0%.

Shell dropped 2.1% after saying it would write down up to $5 billion in the first quarter as a result of its decision to exit Russia, higher than previously disclosed.

European shares fared better than stocks markets in Asia and the United States, which weakened after minutes of the Fed’s March meeting showed that officials “generally agreed” to cut up to $95 billion a month from the central bank’s asset holdings to fight surging inflation.

“The risk of stagflation has risen substantially… Despite the hit to economic activity from the war, the strength of inflation will prompt the ECB to begin tightening monetary policy sooner than is currently priced into markets,” said Andrew Kenningham, chief Europe economist at Capital Economics.

European Central Bank policymakers appeared keen to unwind stimulus at their March 10 meeting, with some pushing for even more action, accounts of the gathering showed. Markets see around 43 bps worth of rate hikes this year, up from around 30 bps seen before the meeting.

Fanning fears over recession risks in the euro area, a Reuters poll saw euro zone inflation staying high for the remainder of 2022.

The STOXX 600 index is on course to end lower for the week as geopolitics and central bank hawkishness dent sentiment. The U.S. targeted Russian banks and elites with a new round of sanctions, including banning Americans from investing in Russia.

French stocks dropped 0.6% after losing more than 3% in the last two sessions ahead of April 10 voting in the first round of the presidential race.

French far-right candidate Marine Le Pen has gained momentum in recent days, although President Emmanuel Macron is still ahead and seen as the most likely winner.

Italy’s Atlantia climbed 6.9% after Global Infrastructure Partners and Brookfield Infrastructure pitched a possible takeover last week, heating up the race for the road and airport operator.

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