European stock market tumbled on Thursday as investors braced for the European Central Bank's first interest rate hike in 11 years, while Russia resumed gas supplies to Europe through a key pipeline, allaying investors' fears.
The Stoxx50 index is sliding further after the resignation of Italian Prime Minister Mario Draghi. The S&P 500 and Nasdaq 100 also fell. Treasury yields rose, pushing the 10-year benchmark above 3%.
The euro rose slightly ahead of the ECB meeting at which it is expected to hike for the first time in more than a decade. This could lead to a 25 basis point rate hike. It will also launch its new crisis management tool.
"Markets are treading water ahead of the crucial European Central Bank rate decision at lunchtime," Victoria Scholar, head of investment at Interactive Investor, said. This would end its experiment with negative interest rates, she added.
Risk sentiment remains volatile as investors debate whether stocks have hit lows after selling off this year on the back of the war in Ukraine, slowing growth in China and the prospect of a US recession. The resumption of gas exports to Europe through the Nord Stream pipeline would bring some relief to a continent that is rushing to stockpile fuel before winter.
Draghi's resignation hit Italian bonds and equities. The collapse of his government was inevitable after three of his coalition partners withdrew their support in a confidence vote Wednesday.
President Joe Biden says he expects to speak to Chinese leader Xi Jinping "within the next 10 days". The US considers whether lifting some tariffs on Chinese imports would help stem rampant inflation.
Key events to watch:European Central Bank rate decisions.