European stock markets fell, following hawkish remarks from the Federal Reserve indicating that next year will see fewer rate cuts than expected. The Stoxx Europe 600 index closed down 1.5%, with all sectors declining. Semiconductor stocks dropped, after Micron Technology issued disappointing revenue forecasts, dragging down European chip equipment manufacturers including ASML Holding and BE Semiconductor Industries NV. Federal Reserve officials cut rates by 25 basis points as expected, but lowered the prospects for further cuts next year as the 2% inflation target remains challenging to achieve. The US stock market rebounded slightly on Thursday, indicating that the previous day's sell-off was excessive. "Signs that inflation will rise and become uncontrolled have sounded the alarm, and all the potential issues the market faces may now emerge," said Ricardo Gil, Deputy Chief Investment Officer at Trea Asset Management. "With only a few trading days left this year, January is likely to be a more chaotic month." The Stoxx Europe 600 index is currently down about 4% from the record high set in September, with year-end gains shaken by concerns over economic growth and political troubles in France and Germany.