London, United Kingdom —
Global stock markets slid Wednesday in cautious deals before an expected half-point interest rate hike from the inflation-fighting US Federal Reserve.
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Meanwhile, oil prices rebounded sharply after EU chief Ursula von der Leyen said the bloc would impose a gradual ban on Russian crude over
Moscow's invasion of Ukraine.
European stocks fell after a broadly downbeat session in Asia, although key bourses, including Shanghai and Tokyo remained shut.
The dollar drifted lower versus the euro and yen.
Trading cautiously
"Stocks across Europe are treading cautiously ahead of today's Fed announcement," City Index analyst
Fiona Cincotta told AFP.
"Stock markets often fall in reaction to rising interest rates because the cost of borrowing becomes more expensive and earnings and growth slows."
The Fed is Wednesday forecast to unveil a half-percentage-point interest rate hike — its biggest increase since 2000 — as global central banks race to tame galloping inflation in the wake of the Ukraine war.
The announcement is due one day before the
Bank of England is also predicted to deliver a hike.
India's central bank unexpectedly ramped up its key rate by 40 percentage points to 4.4 percent on Wednesday.
Policymakers are seeking to tackle runaway prices -- but risk damaging global economic recovery from the pandemic.
Investor sentiment also remains dogged by fallout from Russia's ongoing Ukraine invasion, which has fueled bumper gains for many raw materials, including crude.
That has in turn sent inflation accelerating to multi-decade highs in nations including Britain and the United States.
Oil jumped almost four percent Wednesday after the latest
EU crackdown on Russia, a major crude producer.
"We now propose a ban on
Russian oil. This will be a complete import ban on all Russian oil, seaborne, and pipeline, crude and refined," von der Leyen told the European Parliament.
But, she added, "we will make sure that we phase out Russian oil in an orderly fashion," with crude banned gradually over the next six months and refined fuels by the end of the year.
The EU executive also proposed sanctioning the head of the Russian Orthodox Church, Patriarch Kirill, and excluding the Russian bank Sberbank from the SWIFT network.
'EU tightens screw'
"As the EU tightens the sanctions screw on Russia by bringing in a phased ban on its
crude oil, worries about global supply have reared up again," said Susannah Streeter, senior analyst at Hargreaves Lansdown.
"The price of the benchmark Brent scurried up ... to above $108 a barrel after the toughened up stance emerged."
Oil traders were already on tenterhooks before Thursday's gathering of OPEC and other key producers, including Russia, who will discuss whether or not to lift output more than expected.
The alliance known as
OPEC+ had slashed output in 2020 when oil prices crashed due to the pandemic.
When demand picked up again last year as countries emerged from lockdowns, the coalition began to modestly increase production.
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