Growth woes after Swiss, UK rate hikes drag European shares to 16-month lows

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* Swiss central bank hikes rate by half a point

* Bank of England raises rates by 25 bps again

* Britain's ASOS slumps after profit warning

By Sruthi Shankar and Bansari Mayur Kamdar

June 16 (Reuters) - European stocks tumbled to their lowest levels in 16 months on Thursday after policy tightening in Britain and Switzerland fuelled fresh worries about the impact of inflation on the global economy.

Already under pressure at the open after the U.S. Federal Reserve's big interest rate hike on Wednesday, the benchmark STOXX 600 .STOXX fell further after the SNB's unexpected rate hike.

The index .STOXX declined 2.5%, hitting its lowest level since February 2021.

"There is very little to be cheerful about," said Giuseppe Sersale, strategist at Anthilia in Milan, adding that with the Swiss central bank's surprise rate hike, investors are clearly worried about more tightening elsewhere.

Yields also rose as money markets ramped up bets on European Central Bank rate hikes to price in around 190 bps of rises by December, compared to 140 bps a day earlier. ECBWATCH

The Swiss equities index .SSMI dropped 2.9%, lagging major regional European markets, with banking heavyweights such as UBS UBSG.S and Credit Suisse CSGN.S down 4.9% and 6%, respectively.

The UK's blue-chip FTSE 100 .FTSE fell 3.1% after the Bank of England raised interest rates by an expected quarter percentage-point but said it was ready to act "forcefully" to stamp out dangers posed by an inflation rate heading above 11%.

"The initial reaction was dovish. But, having sort of digested the news it seems that the takeaway is that they may have hiked by 25 this time but the policy statement really indicates that they may be considering more aggressive hikes further on," said Jonas Goltermann, senior economist at Capital Economics.

The retail sector .SXRP dropped 3.8% after British online fashion retailer ASOS ASOS.L slumped 32.5% and warned inflationary pressures were affecting shopping behaviour.

Smaller rival Boohoo BOOH.L shed 11.3% after reporting an expected fall in revenue in its latest quarter.

The STOXX 600 snapped a six-day losing streak on Wednesday after the European Central Bank (ECB) unveiled measures to temper a bond market rout.

Still, worries about the darkening economic outlook and hit to corporate earnings have left the index with year-to-date losses of 17.3%.

France's benchmark CAC 40 .FCHI fell more than 20% from its most recent record closing high to confirm a bear market began on Jan. 5, according to a commonly used definition.

Prosus NV PRX.AS , the Dutch-based technology investor, slipped 5.6% after it said underlying earnings will fall in 2022 due to lower dividends from companies it invests in, and higher investment costs in e-commerce companies it operates.
Reporting by Sruthi Shankar and Bansari Mayur Kamdar in Bengaluru, Danilo Masoni in Milan; Editing by Shounak Dasgupta, Anil D'Silva and Elaine Hardcastle

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