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The pan-European STOXX 600 index fell 0.5% by 0709 GMT. The index is set to mark its third straight session of losses.
Money markets have now priced in 75 basis points of hikes from the ECB by October, from earlier expectations of 25 bps hikes at each meeting, as euro zone inflation hit record highs. Data showing strong first-quarter economic growth in the euro zone lent weight to the hawkish bets.
Markets globally weakened ahead of the decision, with new COVID-19 curbs in Shanghai adding to recession worries. Asian shares slipped, U.S. Treasuries fell as did U.S. stock futures, while the safe-haven dollar surged to two-decade highs.[MKTS/GLOB]
The ECB decision is due at 1145 GMT, followed by a press conference at 1230 GMT.
Losses in Europe were largely broad-based and led by miners, while the energy sector was the sole gainer, up 0.4%. Oil prices cheered China’s stronger-than-expected exports in May but soon gave up gains. [O/R]
Among stocks, British American Tobacco (NYSE:BTI) rose 0.8% after it said it was confident in delivering its financial targets irrespective of how long it takes to offload its Russian unit.
