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European shares closed flat on Friday as gains in defensives countered a sell-off in semiconductor and commodity-linked stocks, while investors prepared for the European Central Bank’s (ECB) first interest rate hike in over a decade this month.

Data on Friday showed euro zone inflation came in higher than expected and hit yet another record high in June. That firmed the case for an ECB rate hike as the inflation peak could still be months away.

Aggressive central bank moves to curtail inflation have left investors worried about the likely hit to economic growth. The STOXX 600 lost 1.4% this week and has shed more than 16% this year, as worries from stubborn inflation to China’s slowing economy and Russia’s invasion of Ukraine curbed risk appetite.

“The door is open for (the ECB) to being significantly more aggressive to try and stand down on inflation,” said Michael Brown, head of market intelligence at Caxton.

The continent-wide STOXX 600 index cut session losses of up to 1%, a day after marking its worst quarter since the pandemic-led selling of early 2020 and tracking a dour Wall Street session.

Most major European bourses ended in positive territory.

“What we could be seeing (in markets) is a little bit of a dead cat bounce after yesterday’s pretty steep losses rather than a move that’s explicitly tied to that inflation data,” Brown said.

Dutch semiconductor equipment maker ASML, Franco-Italian chipmaker STMicroelectronics and German chipmaker Infineon slid between 2.9% and 5.4% after U.S. memory-chip firm Micron Technology gave a significantly weaker-than-expected business outlook on Thursday.

Europe’s technology index slumped 2.0%. Miners lost 2.5% and oil and gas firms also slid as commodity prices fell on worries about economic growth.

Utilities were the biggest sectoral gainers, up 3.1% as Uniper recovered after plunging more than 14% on Thursday when it asked the German government for help due to losses arising from Russian gas restrictions.

Other defensive sectors such as consumer staple stocks, telecoms and healthcare also rose as investors sought to hedge amid recession worries as data showed weak factory activity in Spain and Italy.

Among other stocks, La Francaise des Jeux (FDJ) slid 4.7% after Citigroup downgraded the French lottery group’s stock to “sell” from “buy”.

Shares of Sodexo gained 4.1% after the French catering and food services group reported better than expected third-quarter revenue.

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