LIVE MARKETS-Banks surge on Fed's hawkish tone

* European Stoxx 600 down 0.2%

* Bank stock index jumps after Hawkish Fed, up 2.1%

* Insurers up 0.8%

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BANKS SURGE ON FED'S HAWKISH TONE (0726 GMT)

European stocks dipped lower this morning after nine
straight sessions of gains as Fed's sudden hawkish turn sent
recent winners such as basic resources sharply lower.

Banks were the top sectoral gainers (+2.1%) as Fed officials
on Wednesday penciled in two potential rate hikes in 2023.

T&L and insurance stocks were other big winners.

The travel index was led by Easyjet and Premier-Inn
owner Whitbread. Whitbread said it saw strong forward
booking trends in tourist locations.

The sector and airlines were also supported by news that
Britain is looking at easing travel restrictions, including
allowing those who are double vaccinated against COVID-19.

BA owner IAG, easyJet and Ryanair were up 3%-3.5%.

UK rail operator Trainline was also among the top gainers
after reporting strong Q1 ticket sales.

(Thyagaraju Adinarayan)

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TALKING ABOUT TALKING ABOUT THE BIG T BEGINS AT THE FED
(0635 GMT)

And just like that the U.S. Federal Reserve lit a fire under
markets by suggesting it may well raise interest rates at a much
faster pace than many believed.

Asian equities hit a three-week low, 10-year Treasury yields
-- which jumped to almost 2-week highs after Thursday's Fed
statement -- remain near those levels early in London
.

The dollar is sailing at near two-month highs versus major
peers, having posted its strongest single day gain in 15
months.

Fed officials on Wednesday pencilled in two potential rate
hikes in 2023 - sooner than policymakers had previously
projected - and Chair Jerome Powell edged closer to unveiling
plans to taper the Fed's $120 billion a month of bond purchases.

Powell even described the two-day gathering as the "talking
about talking about meeting," a glib reference to his
protestations earlier this year that the Fed was not even
"talking about talking about" tighter policy.

That hawkish shift is likely to resonate on Thursday --
European shares are expected to open lower, U.S. stock futures
are in the red.

And watch the signals from other major economies too. The
Bank of Japan may be able to start debating ways to phase out
its extraordinary stimulus, says former central bank executive
Eiji Maeda.

Australian job creation blew past expectations in May, a
major upside surprise that will test policy makers' commitment
to keeping rates at historic lows for another two years or more.

In corporate news, TikTok owner ByteDance's total revenue
more than doubled last year to $34.3 billion but its net loss
widened to $45 billion, according to a company memo.

Key developments that should provide more direction to
markets on Thursday:

- Sources say China market regulator begins antitrust probe
into ride-hailing giant Didi Chuxing, as it pushes ahead with
what could be the largest IPO in the United States this year

- NZ Q1 GDP rose 1.6%, beats all estimates

- ECB TLTRO allotment due

- China May new home prices up 0.6% m/m vs 0.6% in April

- ECB's Christine Lagarde, Fabio Panetta speak at Eurogroup
meeting; ECB Board member Frank Elderson speaks at 1400 GMT;
chief economist Philip Lane 1230 GMT

- U.S. jobless claims/Philly Fed

- SNB, Norges Bank meet

- Indonesia, Egypt, Ukraine, Turkey, Taiwan central banks

(Dhara Ranasinghe)

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FED MORE HAWKISH THAN EXPECTED (0533 GMT)

European stock futures are lower as the Federal Reserve was
more hawkish than expected at yesterday's policy meeting,
sending the U.S. bond yields higher and Wall Street lower.

The central bank moved their first projected rate increases
from 2024 into 2023, with seven of 18 policymakers foreseeing
rates moving higher next year and opening the possibility of
even more aggressive action. Chair Jerome Powell said there had
also been initial discussions about a bond-buying tapering.

Now analysts wonder if a ‘buying the dip’ strategy could
still work today or in the next few days, as the price reaction
in Asia suggests investors are nervously cautious rather than
panicking for the exit door.

(Stefano Rebaudo)

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