European stocks bounce off lowest in more than a year after Powell remarks

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* Wall Street turns positive, helping sentiment

* Oil majors slide as crude dives

* Defensives gain, capping losses

* ArcelorMittal, other steel makers fall on JPM downgrade (Updates to close)

By Sruthi Shankar and Susan Mathew

June 22 (Reuters) - European stocks bounced off session lows on Wednesday after Federal Reserve Chair Jerome Powell said the U.S. central bank is "strongly committed" to bringing down inflation.

Wall Street erased losses to turn positive after the remarks at a hearing before the U.S. Senate Banking Committee, while the pan-European STOXX 600 .STOXX closed down 0.7%, after having fallen 1.8% to its lowest since January 2021.

Analysts said markets took heart from the lack of surprises in the comments.

"We are seeing a reaction akin to something along the lines of a medicine that tastes bad is normally the one that makes you better soonest," said Stuart Cole, senior macro strategist at Equiti Capital.

"Runaway inflation is just as damaging for stock valuations as a possible recession. The negative growth story Powell's comments imply are being tempered by a sense of relief that the authorities are taking the inflation threat seriously."

Equity markets took a beating last week as recession fears heightened after the Fed raised its key interest rate by three-quarters of a percentage point, and signalled more. The Bank Of England also raised rates and the European Central Bank is due to start its hiking cycle next month.

Data on Wednesday showed soaring food prices pushed British consumer price inflation to a new 40-year high of 9.1% last month, underlining the severity of the cost-of-living crunch. UK's blue-chip FTSE 100 .FTSE dropped 0.9%.

Weighing the most were material stocks .SXPP as iron ore and copper prices slumped on china supply and growth worries. Oil and gas stocks .SXEP slipped 3.3% as crude prices dropped on U.S. President Joe Biden's plan to cut fuel costs for drivers.

Gains in defensive sectors such as real estate .SX86P , food and beverages .SX3P and healthcare .SXDP capped losses.

A combination of surging inflation, tighter monetary policies, the Ukraine war and a slowdown in China's economy has pushed the wider STOXX 600 down about 18% from its all-time closing high hit in January.

Germany's DAX .GDAXI dropped 1.1% as BASF BASFn.DE slid 5.8% after the German chemical group's CEO said the company is likely to face a considerable downturn early in the second half of the year.

European steel companies such as ArcelorMittal MT.AS , Voestalpine VOES.VI and Salzgitter SZGG.DE fell in the range of 13.1% and 11.1% after JPMorgan downgraded the stocks, saying steel prices are yet to bottom.

Norway's Mowi MOWI.OL tumbled 7.3% after Groupe Bruxelles Lambert (GBL) sold a 3.5% stake in the world's largest fish farmer.
Reporting by Sruthi Shankar in Bengaluru; Editing by Shailesh Kuber, Uttaresh.V and David Gregorio

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