European stocks pushed slightly higher on Thursday as the Bank of England delivered its biggest interest rate hike in 27 years and traders tracked Chinese military drills around Taiwan. Although economists had anticipated the 0.50-percentage point rise, the UK central bank also grimly predicted the country would dip into a lengthy recession later in the year. “The UK economy does not look like it is positioned for a prolonged downturn, so that should allow the mostly hawkish BoE to be aggressive with tightening,” said Edward Moya, from OANDA trading platform. The rate hike mirrored aggressive monetary policy from the US Federal Reserve and the European Central Bank last month, as the world races to cool red-hot inflation that has been fuelled by Russia’s invasion of Ukraine. Underscoring the urgency, the Bank of England also predicted UK inflation would peak this year at just over 13pc, its highest level since 1980. Analyst Kallum Pickering, from Berenberg, said the UK central bank’s moves would “contribute to a further tightening of UK financial conditions”. “While this will do little to dampen the likely further rise in inflation near-term, it should help to contain inflation expectations. This will reduce the risk that high inflation persists once it’s mostly external triggers have faded,” he said. After the rate hike announcement, the British pound sank 0.7pc versus the euro and dollar as dealers fretted over the gloomy outlook. Shares in London closed just in the black, while Paris was 0.6pc higher and Frankfurt advanced 0.5pc. Wall Street stocks dipped slightly in mid-morning trading ahead of key US jobs data. Oil prices tumbled with the main US oil contract falling back down to levels not seen since before the war in Ukraine sent crude prices soaring. West Texas Intermediate dropped below the $90-mark in afternoon trading in Europe. The fall comes after a decision by the OPEC+ oil cartel, led by Saudi Arabia and Russia, a day earlier to undertake just a small increase in production. US energy data also revealed unexpectedly weak gasoline demand. “The oil market is a mixed bag as demand destruction is met with limited spare capacity,” said OANDA’s Moya. Most Asian indices tracked a Wall Street rally the previous session fuelled by healthy economic and earnings data, despite lingering Taiwan concerns. New York surged on Wednesday after a report on the crucial US services sector showed surprise improvement, soothing recession fears in the world’s top economy. Markets have swung this week after a number of Federal Reserve officials lined up to suggest there were still some big US rate hikes likely and talk of cuts next year might be overdone. The mood in Asia was also a lot more settled after the upheaval of this week’s visit to Taiwan by US House Speaker Nancy Pelosi, which sparked outrage in China with warnings of stern military and economic responses. Beijing has suspended a limited number of cross-strait imports and exports, and on Thursday began its largest-ever military exercises encircling Taiwan that are expected to last for days. Soon after, Taiwan’s defence ministry said it was “preparing for war without seeking war”. Taipei stocks fell again on worries that the Chinese manoeuvres would hit shipping lanes and flights into Taiwan.