European stocks fall amid hawkish Fed comments, new Russia sanctions; Stoxx 600 down 2%

The pan-European Stoxx 600 fell 2% during afternoon trade, with autos dropping 3.8% to lead losses as all sectors and major bourses slid into negative territory.

Fed Governor Lael Brainard said during a Minneapolis Fed webinar on Tuesday night that the central bank will need to reduce its balance sheet quickly and continue to increase interest rates at a steady pace in order to contain surging inflation. The comments sent major U.S. averages lower and the 10-year Treasury yield to a new 2022 high.

San Francisco Fed President Mary Daly then told the Native American Finance Officers Association that inflation running at a 40-year high is "as harmful as not having a job" and assured the group that the Fed is ready to act.

Anneka Treon, managing director at Kempen, told CNBC on Wednesday that the "bandage" of the Fed put — the market belief that the Fed will step in to implement policies limiting a stock market pullback — has "essentially been ripped off altogether."

"Regardless of whether we are entering an official recession — when that might happen, what the technicalities of the yield curve is telling us — what we know for certain is we are entering a growth slowdown situation; what we know for certain is that the path of inflation is far more unknown than we thought it was," she told CNBC's "Squawk Box Europe," adding that this means higher volatility ahead for investors.

Global investors are also awaiting details of fresh international sanctions against Russia after allegations emerged of civilian killings in Ukrainian towns now recaptured from Russian forces. The European Commission on Tuesday proposed banning Russian coal as part of its next round of sanctions.

U.S. stock futures were lower in early premarket trade as investors stateside await the release of the Fed's Tuesday meeting minutes, hoping for further details about the Federal Open Market Committee's plan to reduce the central bank's balance sheet.

Shares in Asia-Pacific also declined on Wednesday, tracking overnight losses on Wall Street with Chinese tech stocks in Hong Kong falling sharply.

In terms of individual share price movement in Europe, ams OSRAM shares fell more than 9.6% to the bottom of the Stoxx 600, continuing Tuesday's declines after the electronics company's Capital Markets Day failed to impress investors.

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