European shares wilted on Friday as traders ramped up interest rate hike bets following hawkish comments from central bank officials, while German software giant SAP and French luxury goods company Kering dropped after glum first-quarter results.
The pan-European STOXX 600 lost 0.7%.
The benchmark was on course to end its second straight week in the red as markets assessed the fallout from the war in Ukraine, elevated inflation levels and monetary policy tightening by central banks.
U.S. Federal Reserve Chairman Jerome Powell said on Thursday a 50-basis-point rate increase “will be on the table” when the bank meets on May 3-4.
That followed comments from European Central Bank (ECB) Vice President Luis de Guindos who backed an end to bond purchases in July.
Meanwhile, French business activity grew in April at the fastest pace in more than four years, while Germany’s manufacturing sector saw much slower growth in the month.
French stocks lead gains on Macron hopes; upbeat earnings lift broader Europe
“Further slowdown in the eurozone’s economic activity confirms the notion the ECB may need to proceed more carefully with raising rates than other central banks like the Fed and the Bank of England,” said Charalambos Pissouros, head of research at JFD Group.
Money markets are pricing in more than 80 basis points of ECB rate hikes by December.
Focus was also on France’s presidential run-off vote on Sunday, where President Emmanuel Macron has possibly extended his lead over far-right challenger Marine Le Pen. France’s CAC 40 was headed for its best week in four.
Nearly all European subsectors and regions were in the red, with retail and tech stocks among the biggest decliners.
Kering fell 5.2% after posting downbeat sales at its crown jewel Gucci, hurt by lockdowns in China.
Germany’s SAP shed 3% after flagging a revenue hit of 300 million euros ($325.26 million) from its Russia exit.
Swedish hygiene and health company Essity jumped 14% to top the STOXX 600 after its first-quarter earnings exceeded expectations, while Holcim rose 5% after the cement maker raised its full-year sales outlook.