European stock markets closed lower on Friday, as investors took stock of a week of interest rate hikes by central banks and analyzed the latest news from the banking sector, which led to a decline in bank stocks, reports CNBC.
The pan-European Stoxx 600 index ended the day down 1.4% and almost all sectors recorded declines.
Markets pared losses slightly after European Central Bank President Christine Lagarde told EU leaders that the eurozone’s banking sector was resilient thanks to strong capital, liquidity positions and post-2008 reforms.
She also said the ECB’s toolkit was equipped to provide liquidity to the financial system if needed.
But the banking component of the index fell by 3.8%, despite these assurances.
This week, Citigroup downgraded the European banking sector to “neutral”, from “overweight”, citing the effects of the continuous tightening of monetary policy.
Deutsche Bank shares pared early-day losses to end down 8.5%, extending a 3.2% drop on Thursday, after its credit default swaps, a form of insurance for holders of bonds, have increased.
UBS, Societe Generale, Barclays and BNP Paribas were among the banks whose shares fell sharply.
The index of shares of oil and gas companies fell by 2.8%, of construction companies by 3.1%, and those of industrial companies by 2.5%.
The DAX index of the Frankfurt Stock Exchange fell by 1.66%, the CAC 40 of the Paris Stock Exchange by 1.74%, and the FTSE 100 of the London Stock Exchange by 1.26%. In Milan, the FTSE MIB index fell 2.23%.
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