European Markets Close Lower as Investors Assess Japan News, Global Interest Rate Outlook

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This is CNBC's live blog covering European markets.

European markets were lower Tuesday as investors assessed a surprise announcement from the Bank of Japan and the interest rate outlook for 2023.

The pan-European Stoxx 600 closed 0.4% lower provisionally after a choppy afternoon, with most sectors and major bourses trading in negative territory. Autos led losses with a 1.5% fall, while a few sectors gained, including banks, which rose 1.7%.

The Stoxx index had traded lower earlier in the session after Japan's central bank caught markets off guard by widening its cap on 10-year Japanese government bond yields.

The BoJ — an outlier compared with most major central banks — also left its benchmark interest rate unchanged at -0.1% Tuesday and vowed to significantly increase the rate of its 10-year government bond purchases, retaining its ultra-loose monetary policy stance.

It comes after the European Central Bank last week hiked its key interest rate from 1.5% to 2% and said it would look to shrink its balance sheet by around 15 billion euros ($15.9 billion) every month from March 2023 to the end of the second quarter. The ECB said rate hikes would need to continue "significantly at a steady pace."

The Bank of England and the Swiss National Bank struck similar tones and also opted for 50 basis point hikes, matching the U.S. Federal Reserve's decision last Wednesday.

Markets in the Asia-Pacific fell as the Bank of Japan modified its yield curve control tolerance range while holding its ultra-low benchmark interest rates steady, with the Nikkei 225 leading losses.

U.S stocks were mixed in morning trade, with the Dow Jones Industrial Average flat and the S&P 500 and Nasdaq Composite moving down 0.16% and 0.39%, respectively.

Stocks on the move: Banks and energy up, property down

Banks continued to shine in late afternoon trade amid choppy markets, with Commerzbank up 8.5 , Deutsche Bank up 5.3%, Italy's Banco Bpm up 4.1% and Santander up 4%.

Energy firms were also near the top of the Stoxx 600 index, with U.K. power firm Drax up 7%, Finland's Fortum extending recent gains by another 4.7% after ditching its Uniper stake, and British Gas owner Centrica adding 3%.

At the other end of the table, European real estate firm Aroundtown dropped 8.2% after Berenberg analysts downgraded the stock from buy to hold and on ongoing fears around rising interest rates and a property downturn.

Real estate firm and shopping center operator Unibail also fell around 4%.

— Jenni Reid

Stocks slip at Tuesday's open

Stocks fell Tuesday, signaling the potential for a fifth negative day in a row.

The Dow Jones Industrial Average was little changed at Tuesday's open. The S&P 500 and Nasdaq Composite fell 0.26% and 0.54%, respectively.

—Carmen Reinicke

French winter power supply risk lowered to 'medium,' says RTE

The risk to French power for winter has been lowered to 'medium' by the French grid operator RTE.

Higher availability of nuclear and hydropower prompted the upgrade, along with a drop in consumer demand, RTE said.

French authorities have been urging households and businesses to cut their electricity use by 10% as Russia's war in Ukraine continues to threaten Europe's energy supplies.

— Hannah Ward-Glenton

European banks make gains

European banks topped the Stoxx index Tuesday afternoon.

Germany's Commerzbank led gains, up 8.7%, followed by Deutsche Bank, which was up 4.7% since the start of trading.

Banco BPM, Banco Sabadell, Caixabank, Bankinter and Banco Santander were all up at least 2.5% around 12.30p.m London time.

It comes after the Bank of Japan announced it would review its yield curve control policy. The central bank also opted to leave its benchmark interest rate unchanged at -0.1%, bucking the global trend of hiking rates.

— Hannah Ward-Glenton

Central banks won’t reach inflation reduction targets in 2023, portfolio manager says

Central banks won't reach inflation reduction targets in 2023, a portfolio manager told CNBC's "Squawk Box Europe" Tuesday.

Giulio Renzi-Ricci, head of asset allocation for Europe at Vanguard, discussed what high interest rates would mean for portfolio construction.

British bank TSB fined for £48.7 million for botched IT migration

TSB was fined £48.7 million ($59.1 million) for a botched IT platform migration in 2018, according to U.K. regulators.

The IT system "immediately experienced technical failures," the Financial Conduct Authority and Prudential Regulation Authority said, which resulted in "significant disruption" to the lender's services both in-person and online.

TSB CEO Robin Bulloch apologized to consumers affected by the problems in a statement.

— Hannah Ward-Glenton

CNBC Pro: Is China set for a rebound in 2023? Wall Street pros weigh in — and reveal how to trade it

What's next for China after it rolled back a slew of Covid-19 measures?

Market pros weigh in on the prospect of a rebound in the world's second-largest economy and reveal opportunities for investors.

CNBC Pro subscribers can read more here.

— Zavier Ong

CNBC Pro: Netflix is 'top pick' for 2023 despite ad target miss, Evercore's Mark Mahaney says

Netflix is a "top pick" stock for next year despite the streaming giant reportedly missing ad revenue targets, according to Evercore ISI.

Netflix shares closed lower by 8.63% on Thursday following a report that the company offered to refund money to advertisers for missing viewership targets.

CNBC Pro subscribers can read more about why Netflix is Mark Mahaney's favorite pick.

— Ganesh Rao

European markets: Here are the opening calls

European markets are heading for a lower open Tuesday.

The U.K.'s FTSE 100 index is expected to open 60 points lower at 7,308, Germany's DAX 189 points lower at 13,758, France's CAC down 80 points at 6,394 and Italy's FTSE MIB down 268 points at 23,400, according to data from IG.

There are no major earnings or data releases.

— Holly Ellyatt

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