European stocks closed lower Wednesday as U.S. markets eased from record highs in a volatile trading session that saw bank stocks hold down gains across major benchmarks and yet another surge in the U.S. dollar.
Britain's FTSE 100 ended modestly in the red after a session that saw the benchmark rise as much as 75 points at one point in morning trading, only to give back all of those gains and more during the budget statement address to parliament from Finance Minister Philip Hammond
The U.K.s decision to leave the European Union will slam the breaks on the country's economic recovery and add more than £122 billion in extra borrowing over the next five years, Hammond told lawmakers as he abandoned plans for a budget surplus by 2020 and said debt would rise to just under £2 trillion in the near term. Interestingly, the independent Office for Budget Responsibility pegged the direct costs of Brexit at £58.7 billion over the next five years.
Benchmark 10-year U.K. government bonds, known as Gilts, reacted sharply to the new borrowing figures, with yields rising as much as 7 basis points to 1.45% in advance of accelerated sales of new debt from the government.
Germany's DAX index, however, slid around 0.48% on the day as shares of the country's biggest lenders suffered after the European Commission unveiled plans to tighten capitalisation rules and introduce requirements for U.S. and foreign lenders operating in the EU.
Europe's Stoxx 600 Banks index fell around 0.5% on the session while the shares of major European banks fell in concert, holding down gains for broader equity indices.