RIO Rio Tinto Plc

Global stocks staged a sharp retreat Thursday as a cautious tone from the Federal Reserve and a fresh fall in oil prices fueled anxiety about the health of the world economy.

The Stoxx Europe 600 was down 3.5% in early trade as banking and mining shares tumbled.

Investors also shed stocks in Asia and piled into havens such as gold and government bonds, while the yen gained against the dollar.

Federal Reserve Chairwoman Janet Yellen on Wednesday highlighted risks to growth and inflation that could delay the central bank's plans for raising rates.

"Financial conditions in the United States have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar," she said.

Wall Street gave up early gains after Ms. Yellen's testimony to end lower for a fourth consecutive day.

Stock futures pointed to a 1.7% opening loss for the S&P 500. Changes in futures don't necessarily reflect market moves after the opening bell.

Ms. Yellen's statements "do not appear to take all of 2016 off the table [for rate rises], but perhaps moderate expectations," said Bill Northey, chief investment officer at the Private Client Group at U.S. Bank.

In Europe, banking shares fell over 5% after a brief bout of relief in the previous session, taking losses for the year to 28%.

French bank Socié té Gé né rale SA on Thursday reported a jump in net profit, but warned that it may fall short of its profitability target this year. Shares were down 9.2%.

The basic-resources sector also fell sharply after mining giant Rio Tinto PLC swung to an annual loss and scrapped its progressive dividend policy amid a sharp downturn in commodity prices. Shares in the miner were down 7.7%.

Rallies in global stocks this year have been short-lived amid uncertainty around central-bank policy, global growth, China's currency and the oil price.

Brent crude oil was last down 1.8%% at $30.30, while WTI crude futures fell 2% to $26.89, despite a drawdown in U.S. stockpiles.

Recent falls in oil prices have fueled concerns among investors about the strength of the global economy, as well as possible spillover effects from bankruptcies in the energy sector and declines in energy-dependent economies.

Earlier, Hong Kong's Hang Seng Index fell 3.9%, catching up with the week's selloff as the market reopened from a holiday.

Japan's Nikkei Stock Average and China's Shanghai Composite Index were both closed, but investors continued to pile into the yen, which tends to rise in times of market stress. The dollar was down 0.9% against the yen at ¥ 112.3250, near its lowest since October 2014.

The euro was up 0.12% against the euro at $1.1296.

As investors sought safety, spot gold in London gained 0.4% to $1210.45 a troy ounce, its highest level since May.

The yield on 10-year German government bonds fell around 0.06 percentage point to 0.185%, according to Tradeweb, while the yield on 10-year U.S. Treasurys fell around 0.04 percentage point to 1.662%. Yields rise as prices fall.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

February 11, 2016 04:45 ET (09:45 GMT)

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