European stocks skid on gloomy business activity data, German energy troubles



* Germany triggers gas alarm stage

* EZ services PMI sinks to 52.8 from 56.1 in June

* Valneva surges on EMA endorsement for COVID-19 shot

* Norway central bank hikes by 50 bps (For a Reuters live blog on U.S., UK and European stock markets, click

or type LIVE/ in a news window)

By Sruthi Shankar and Susan Mathew

June 23 (Reuters) - European shares hit more than one-year lows on Thursday as slowing euro zone business activity heightened growth worries, while German shares dropped 1.8% after the country triggered the "alarm stage" of its emergency gas plan.

The continent-wide STOXX 600 index .STOXX dropped 0.8%, with euro zone banks .SX7P shedding 4.5%. Euro zone bond yields also slid as did the euro EUR= .

The German DAX .GDAXI slid to over three-month lows as falling Russian supplies prompted Thursday's move - the latest escalation in a standoff between Europe and Moscow since the Russian invasion of Ukraine that has exposed the bloc's dependence on Russian gas supplies.

A S&P Global survey showed euro zone business growth slowed significantly this month, and by much more than expected, as consumers concerned about soaring bills opted to stay at home and defer purchases to save money. A PMI covering the bloc's dominant services industry sank to 52.8 from 56.1.

"There was this underlying expectation that services are still doing well. The PMI's poured some cold water on that belief," said Andrea Cicione, head of strategy at TS Lombard.

Other economically sensitive sectors including automakers .SXAP , miners .SXPP and oil & gas stocks .SXEP slipped between 2% and 3.6%.

Healthcare .SXDP , utilities .SX6P and some luxury names were the only gainers on Thursday.

"Until central banks get some signal to pivot towards a more dovish stance, the market will continue to focus on downside risks to growth," Ciicone said.

The European Central Bank is set to raise its deposit rate above zero next month, while U.S. Federal Reserve Chair Jerome Powell reiterated the U.S. central bank's commitment to control inflation even at the risk of an economic downturn.

Norway's central bank raised its benchmark interest rate by 50 basis points on Thursday, its largest single hike since 2002.

But traders are scaling back their bets on how far central banks will be able to lift interest rates this cycle, as recession fears grip.

European shares had briefly cut session losses to edge up tracking a rally in U.S. stock futures before moving back into the red even after a strong open on Wall Street.

The benchmark STOXX 600 has shed nearly 19% since hitting a record closing high on Jan. 5, and if losses continue, the index could confirm a bear market, or 20%, decline from a recent peak.

In company news, Valneva VLS.PA surged 19.6% after its COVID-19 vaccine was endorsed by the European Medicines Agency on Thursday.



PMI Link



Reporting by Sruthi Shankar in Bengaluru; Editing by Rashmi
Aich and Alison Williams

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