(Reuters) -European stock markets were set for their worst week since February 2nd, following a Wall Street riot. Investors feared bigger interest rate increases would be necessary to control decades-high inflation.

Retailers suffered the largest loss of any sector in the pan-European index, which fell to 1.6%.

Europe’s retail market index dropped 2.5% after weak earnings reports highlighted the impact of surging inflation, war in Ukraine and new lockdowns in China.

Adidas (OTC) fell 5.1%, as the company lowered its expectations for 2022 sales due to renewed COVID lockdowns in Greater China.

Zalando, a German online retailer, extended its losses for the second session. It was down 6.2% after it recorded its first quarterly decline.

U.S. stocks plunged sharply Thursday due to investor jitters. This was despite concerns that this week’s Federal Reserve interest rate increase would not suffice to control inflation. [.N]

“I cannot help but feel that yesterday’s reaction was a reflection of how the Fed, while they can offer soothing statements, is starting from an extremely difficult point and have limited flexibility in responding to economic or market concerns. Deutsche Bank Jim Reid (ETR) said it in a memo.

U.S. monthly employment data will be available later today and provide additional information on the strength of the labour market as well as signs that there are wage pressures. This could affect monetary policy forecasts.

Stocks of the UK suffered from a Bank of England warning about a possible recession. ()

Oil & gas stocks were among the few gainers in Europe, up 0.7%, as crude prices traded above $110 a barrel ahead of an impending European Union embargo on Russian oil.[O/R]

There were also other reporting companies: ING Groep (AS: NV) The largest Dutch bank fell 3.1% due to a poorer-than-expected quarterly income. It also reported a spike in provisions for bad loans owing to Russia’s and Ukraine’s exposure.

Ambu, a Danish manufacturer of medical devices, plunged 13.9% following a negative forecast for its full-year earnings. This was due to hospital labor shortages and supply-chain problems.

Grifols, an Spanish pharmaceuticals firm, saw 8.4% increase in its shares after reporting that it had collected blood plasma at levels comparable to pre-pandemic times during the quarter.