MILAN (Reuters) – A disappointing rate outlook from the U.S. Federal Reserve dragged European shares down sharply on Thursday, with several benchmark indexes hitting two-year lows on worries tighter monetary conditions could weigh on sluggish economic growth.

The pan-European STOXX 600 index closed down 1.4 percent, so did Germany’s DAX .GDAXI while France’s CAC .FCHI indexes fell 1.7 percent.

Wall Street also opened in negative territory and the S&P 500 .SPX and the Nasdaq .NDX were down 1.4 percent and 1.8 percent respectively at the time of the bell in Europe.

After raising interest rates for the fourth time this year, the Fed signaled “some further gradual” rate hikes ahead, disappointing market expectations of a more dovish message from the world largest economy’s central bank.

“Concerns in the U.S. about the real estate sector and leveraged loans remain. It’s clear that interest rates cannot continue to rise for long without having important consequences for economic growth,” said Edoardo Fusco Femiano, market analyst at brokerage eToro.

The selloff in Europe was broad-based with all sectors trading in the red but cyclical sectors such as miners .SXPP, tech .SX8P and banks .SX7P led the steep falls, down 2.7 percent, 2.6 percent and 2.4 percent respectively.

Worries over a slowing global economy, a trade spat between Washington and Beijing, and political instability have all been weighing on prospects for earnings growth at European companies.

The STOXX 600 is set for its worst yearly performance since 2008, having fallen 13.5 percent year-to-date.

The DAX, which is heavily exposed to China, was down 17.9 percent year-to-date, while Brexit-hit FTSE was down 12.7 percent. Italian stocks .FTMIB were also off about 15 percent, weighed down by concerns over the country’s public finances.

After a strong 2017, analysts have been cutting their forecasts for euro zone 2018 earnings growth steadily throughout the year. They now expect a growth of around 4.4 percent, down from a peak of 10 percent at the start of the year.

Estimates for 2019 have also been cut.

Among individual movers on Thursday, shares in Airbus (AIR.PA) fell 4.4 percent after the Le Monde newspaper reported the United States had opened an investigation into allegations of corruption, raising the stakes of probes already under way in Britain and France.

Shares in aluminum company Norsk Hydro (NHY.OL) fell nearly 3.5 percent and was among the top fallers in Europe after the United States said it would lift sanctions against its competitor Rusal.

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