Europe ends on a muted note amid bank rout; Metro Bank falls 11%

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European stocks closed in mixed territory Thursday, amid a rout in bank shares, fresh earnings and lingering fears over economic growth.

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The pan-European Stoxx 600 closed provisionally barely changed, with sectors and major bourses pointing in opposite directions. Banks were by far the worst performing sector, down 2 percent, weighed down by an 11 percent downturn in Metro Bank shares.

The U.K. challenger bank’s share price plummeted following reports that an accounting error it reported last week had initially been discovered by the Bank of England’s Prudential Regulation Authority and not by the bank.

Other news weighing on the sector was a report that Deutsche Bank was gearing up for a potential merger with rival Commerzbank by mid-2019 in case its restructuring efforts fall short of targets. Shares of the German lenders fell around 4 percent and 7 percent respectively.

The oil and gas sector led gains on the back of earnings. Shell led the sector in afternoon trade, rising almost 4 percent after reporting that profits soared to a four-year high.

Looking at individual stocks, Ferrari was the top performer on Thursday after the luxury sports car maker posted a 6 percent rise in fourth-quarter core earnings. The stock traveled higher following comments from CEO Louis Camilleri that he was very bullish on the business. Shares were up 11 percent.

Overall, investors are still digesting recent comments from the Federal Reserve. Chairman Jerome Powell said Wednesday that the central bank would be “patient” in increasing rates. Money managers are worried about the reasons behind the Fed’s approach, namely lower growth and the U.S.-China trade war.

On Wall Street, stocks fell as traders took a breather following a sharp rally in the previous session. Investors also monitored a report that the U.S. and China have been discussing a potential meeting between Presidents Donald Trump and Xi Jinping scheduled for late February.

In terms of data, the euro zone registered a growth rate 0.2 percent on the quarter and of 1.2 percent on the year at the end of 2018, the European Statistics Office said Thursday. This means that the region stuck to its lowest pace of growth in four years in the final quarter of 2018.

Brexit also continues to take center stage. EU officials have told the U.K. that the current Withdrawal Agreement will not be reopened, as some U.K. lawmakers have demanded. It is now up to the U.K. Prime Minister Theresa May to outline what she really wants from the EU to overcome the current impasse.

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