European stocks slipped on Thursday after the US Federal Reserve’s decision to raise interest rates aggressively fuelled concerns about a potential recession at a time when global economies are facing sky-high inflation.

The continent-wide STOXX 600 index dipped 0.4% by 0710 GMT, even though European stock futures recovered overnight after Wall Street rallied to close higher.

The retail sector fell the most and was down 2.1% as British online fashion retailer ASOS slumped 14.3% after warning inflationary pressures were affecting shopping behaviour.

German rival Zalando dropped 7%.

European shares break 6-day losing streak

The Fed on Wednesday raised its target interest rate by 75 basis points, its biggest rate hike since 1994, and projected a slowing economy and rising unemployment in the months to come.

UK’s blue-chip FTSE 100 fell 0.5% ahead of a Bank of England policy meeting expected to result in another interest rate hike.

Swiss drugmaker Roche slipped 0.6% after it said its Alzheimer’s medicine crenezumab did not slow or prevent cognitive decline in people.