Investors pedalled into another cycle of selling on Thursday as the dollar tightened its hold on the currency markets, recession fears sapped stocks and bonds suffered more interest rate pain.
Europe's open was brutal. The STOXX 600 share index (.STOXX) dropped nearly 2% from the open, while both the euro and the pound , hammered over the last week by UK debt concerns, slumped 1%.
Government bond markets were braced for German data expected to show consumer prices rising there at the fastest rate since the 1950s. Gilt selling also resumed a day after the Bank of England dramatically intervened in the UK market to try and quell the storm around the government's spending plans.
"The market wouldn't mind some stability, it has become a little bit unpredictable," said Barings Investment Institute's Chief European strategist Agnes Belaisch.
She said investors were now seeing "incoherence" in the UK with government spending as the BoE tries to rein in inflation, while everywhere else the focus is on how high central banks are prepared to go with interest rates.
Germany's 10-year government bond yield, the benchmark of the euro zone, jumped to 2.27% , as pacey numbers from the German state of North Rhine-Westphalia pointed to a double-digit inflation figure for the country as a whole later.
The UK 10-year gilt yield, which drives UK borrowing costs, rose 15 bps to 4.16% after falling almost 50 bps the day before due the BoE's sudden intervention.
UK Prime Minister Liz Truss defended her new economic programme that has sent sterling to a record low this week and left the UK's borrowing costs close to Greece's - saying it was designed to tackle the difficult situation Britain was now in.
