European Markets Close Lower as Global Investor Mood Sours; Stoxx 600 Down 1.5%

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This is CNBC's live blog covering European markets.

European markets retreated on Thursday, tracking weaker global sentiment as investors gauge the economic outlook, a topic high on the agenda at the World Economic Forum in Davos this week.

The pan-European Stoxx 600 closed down 1.6%, with tech stocks shedding 2.9% to lead losses as all sectors and major bourses finished in the red.

CNBC spoke to a range of delegates at the World Economic Forum on Thursday, including the CEOs of Enel, Merck, Rio Tinto and leaders of the Netherlands and Ireland, among many others.

U.S. stocks were set for a second day of losses as investors grew increasingly concerned the Federal Reserve will keep raising rates despite signs of slowing inflation.

The lower trade in Europe and the U.S comes after the Dow Jones Industrial Average tumbled more than 600 points on Wednesday as investors took profits on some of the strong January gains, and as a disappointing December retail sales reading in the U.S. raised concerns about a recession. U.S. stocks fell again Thursday.

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Chairman of Spanish bank BBVA, Carlos Torres Vila, says the normalization of the interest rate environment in 2023 will support European banks. He also discussed how recent data was fueling optimism and an increase in non-performing loans was not materializing.

Stocks on the move: Allfunds down 7%, Encavis down 6%

British investment fund platform Allfunds Group saw its shares fall more than 7% to the bottom of the Stoxx 600 in early trade after HSBC downgraded the stock to "hold" from "buy" and cut its target price.

German electrical company Encavis fell 6% after Barclays downgraded its stock to "underweight" from "equal weight" and cut its target price.

- Elliot Smith

CNBC Pro: Morgan Stanley’s Slimmon says stocks will 'surprise' Wall Street in 2023 — and names two he likes

Investment veteran Andrew Slimmon said he believes stocks are going to do "far better" than most expect this year.

"I'm not so sure about the second half of this year but I think the surprise is going to be that the stock market is going to do better earlier this year than what was almost universally predicted by many of the strategists on the sell side," Slimmon, senior portfolio manager at Morgan Stanley Investment Management, told CNBC's "Squawk Box Asia" on Friday.

He also named two of his favorite stocks.

Pro subscribers can read more here.

— Zavier Ong

CNBC Pro: Veteran investor says 'tech is dead,' names safer stocks to weather the 'current storm'

After a rough 2022, some investors are flocking back to tech, but investment veteran Michael Landsberg is giving the sector a miss.

He favors safer sectors and shares the name of five companies he expects to ride out the "current storm."

Pro subscribers can read more here.

— Zavier Ong

New year rally could be a head fake, says UBS’ Haefele

Investors should brace themselves for stocks' strong start to the year to be short-lived and tame hopes that inflation is peaking, says UBS Global Wealth Management CIO Mark Haefele.

"Risk assets have had a positive start to 2023, with investors encouraged by signs of fading inflation and a swift reopening in China," he said in a note Wednesday. "A relatively warm winter has also eased concerns over energy shortages in Europe."

"It remains too early to assume that the inflation threat has fully passed. While December headline inflation data in both the US and Eurozone continued to point to a deceleration, core inflation has still remained well above central bank targets."

— Tanaya Macheel

CNBC Pro: 2023 is set to be tough — but this 'exceptional' stock is rock solid, fund manager says

Many investors are bracing themselves for a tough year, with at least a mild recession looking likely.

Because of the "darkening" economic environment, fund manager Trent Masters of Alphinity Investment Management told CNBC Pro Talks that he picks stocks with one key quality: earnings resilience.

He names one "rock solid" stock that meets that criterion.

CNBC Pro subscribers can read more here.

— Weizhen Tan

European markets: Here are the opening calls

European markets are heading for a negative open Thursday as investors remain uncertain on the economic outlook, a topic high on the agenda at the World Economic Forum in Davos this week.

The U.K.'s FTSE 100 index is expected to open 37 points lower at 7,793, Germany's DAX 69 points lower at 15,125, France's CAC down 35 points at 7,052 and Italy's FTSE MIB down 77 points at 25,939, according to data from IG.

CNBC will be speaking to a range of delegates at the World Economic Forum on Wednesday, including the CEOs of Enel, Merck, Rio Tinto and leaders of the Netherlands and Ireland, among others.

Follow our coverage here.

— Holly Ellyatt

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