European equities drop as $100 oil stokes inflation fears before ECB

European equities are repeating a familiar pattern, with downside risks taking over after a choppy couple of sessions.

The Eurostoxx 600 has fallen 0.7%, and Germany's DAX is also 0.7% lower. France's CAC 40 has dropped about 1% within the first hour of trading.

Rising oil prices continue to be the main catalyst, pushing bond yields higher in Europe as traders look ahead to the European Central Bank's policy announcement on Thursday.

Brent crude briefly touched the $100 level earlier, and the ongoing climb in oil is adding to the discomfort in equity markets.

Even as yields rise, banking shares are under pressure. Deutsche Bank is down 1.3% in Germany, while French lenders Société Générale, BNP Paribas, and Credit Agricole are all trading lower.

The concern is less about the rise in yields themselves and more about what they signal: inflation fears, growth concerns, and tighter financial conditions.

Airbus is a further drag, slipping 1.7% and adding to weakness in German industrial and defence stocks. LVMH is also down nearly 2%, hitting its lowest level since 2020, as luxury stocks remain under heavy selling pressure.

Energy stocks are a notable exception, benefiting from the oil price surge. The Stoxx Europe 600 oil & gas index is up 0.7% on the day.

Across the Atlantic, US futures are cautious following Wednesday's decline. S&P 500 futures are unchanged, Dow futures are off 0.1%, and Nasdaq futures have edged up 0.1%.

Wall Street is in a cautious stance, with attention shifting to the US consumer price index report due next Friday.