Portugal Colonial - Stocks hit by Middle East, earnings and economy woes before ECB

Asia and Europe fell sharply, tracking a retreat on Wall Street fuelled also by earnings gloom, a surge in US Treasuries and worries over a possible escalation of the Middle East crisis.

London's top faller was emerging markets bank Standard Chartered, whose shares tanked about ten percent on news that it tumbled into a third-quarter net loss on China-linked charges.

ECB policymakers are expected Thursday to leave interest rates unchanged when they meet in Athens, as their previous policy moves seemed to be biting.

A decision to stand pat would end a streak of 10 straight hikes that has seen eurozone interest rates climb faster and further than ever in a bid to tame high inflation.

- Troubling -

"The ECB has already hinted that it has concluded its rate hike cycle and any deviation from this narrative could lead to a noticeable reaction," noted XTB analyst Walid Koudmani.

"On the other hand, investors will be looking for hints as to when rate cuts might begin and comments from (ECB chief Christine) Lagarde might play a crucial role in this prediction.

"In either case, between geopolitical tension and central bank uncertainty, markets could experience an increase in volatility today as economic data, particularly from Europe, remains troubling."

A warning from Israeli Prime Minister Benjamin Netanyahu that a ground invasion of Gaza was being prepared fanned a rush to safe-haven assets and sent crude up more than two percent Wednesday.

The Israeli military said troops entered Gaza with tanks and infantry in an overnight "targeted raid" striking "numerous terrorist cells, infrastructure and anti-tank missile launch posts" before retreating to home soil.

Both main oil contracts extended gains in European trade, with traders concerned about supplies from the crude-rich Middle East.

The commodity had slipped recently on hopes Israel was recalibrating its plans as Palestinian militants Hamas released some hostages.

The spike sent 10-year treasury yields -- seen as a proxy for future interest rates -- surging back towards five percent, and putting pressure on the Federal Reserve as it tries to battle inflation while attempting to avoid tipping the economy into recession.

Data later in the day is expected to show US gross domestic product expanded heartily in the third quarter but there is a worry that with borrowing costs at two-decade highs and oil elevated, a contraction could follow in the new year.

That comes amid a corporate reporting season that saw Facebook parent Meta warn about the outlook next year, Google parent Alphabet post disappointing cloud figures and Texas Instruments issue bearish forecasts.

A plunge in Alphabet shares hit Wall Street, with the tech-rich Nasdaq tanking more than two percent. Amazon was set ahead of its report later Thursday.

Disappointing corporate reports from US tech titans have added to the sense of gloom among investors, while the burst of optimism that greeted China's massive spending pledge this week began to fade.

"Earnings are not providing the lift that investors were hoping for and stocks are suffering as a result," OANDA analyst Craig Erlam told AFP.

- Key figures around 1050 GMT -

London - FTSE 100: DOWN 0.6 percent at 7,370.75 points

Frankfurt - DAX: DOWN 1.4 percent at 14,681.41

Paris - CAC 40: DOWN 0.8 percent at 6,863.03

EURO STOXX 50: DOWN 1.0 percent at 4,033.30

Tokyo - Nikkei 225: DOWN 2.1 percent at 30,601.78 (close)

Hong Kong - Hang Seng Index: DOWN 0.2 percent at 17,044.61 (close)

Shanghai - Composite: UP 0.5 percent at 2,988.30 (close)

New York - Dow: DOWN 0.3 percent at 33,035.93 (close)

Euro/dollar: DOWN at $1.0546 from $1.0566 on Wednesday

Dollar/yen: UP at 150.38 yen from 150.23 yen

Pound/dollar: DOWN at $1.2084 from $1.2112

Euro/pound: UP at 87.26 pence from 87.24 pence

Brent North Sea crude: DOWN 0.7 percent at $89.54 per barrel

West Texas Intermediate: DOWN 0.8 percent at $84.71 per barrel

X.Matos--PC