European stocks tumbled more than 1 per cent on Wednesday as a surge in oil prices intensified concerns over higher inflation, while investors moved out of high-growth tech stocks into banking shares.

After a late-session rally on Tuesday, the pan-European STOXX 600 index fell 1.2 per cent with the tech sector down more than 2 per cent.

Banks slipped 0.1 per cent, but were the smallest decliners on prospects of higher interest rates, as bond yields climbed and oil prices hit multi-year highs.

Britain's HSBC and Germany's Commerzbank were up more than 1 per cent each.

Markets buoyant as investors in Europe and US show renewed appetite for risk

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World shares steady as worries over oil prices ease

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US futures slip ahead of inflation and factory activity data

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Markets flat as falls in airline and leisure stocks bite

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Deutsche Telekom fell 4.1 per cent after Goldman Sachs sold shares worth €1.58 billion in a SoftBank structured finance deal.

Bayer rose 0.7 per cent after the German agricultural and pharmaceuticals firm won its first trial over claims its Roundup weedkiller causes cancer.

Tesco jumped 4. per cent as Britain's biggest retailer raised its full-year outlook and launched a £500-million share buyback programme.