European shares closed lower Friday, marking their first weekly decline in โnearly two months, as concerns about potential interest rate hikes and a sell-off in defense stocks weighed โขon the market. The pan-European STOXX 600 index finished down 0.8% at 475.83,falling โฃ1.3% over the week-its largest weekly drop since โfebruary.
The downturn reflects investor anxiety over the possibility that central banks, including the European Central Bank,โ may delay anticipated interest rate cutsโ due too persistent inflation. This uncertainty, coupled with profit-taking in sectors that had previously led gains, particularly defense, contributed to the โbroad-based selling pressure. The defense โฃsector experienced a significant pullback after recent strong performance fueled by geopolitical tensions, with shares ofโ Leonardoโ and BAE Systems both falling sharply.
London’s FTSE 100 slipped 0.4% while Paris’s CAC 40โข and Frankfurt’s DAX both shed 0.9%. Spanish โขand โitalian shares saw more modest declines.Among individual โstocks, Adidas โrose 3.2% after the German sportswear giant raised its full-year outlook. However, this positive movement was offset by declines in otherโข sectors.
The STOXX 600 had enjoyed a strong run in โคthe first quarter, boosted by optimism about economic recovery and expectations of easing monetary policy. Analysts now caution โคthat the โpath to lower interest rates may be more protracted than previously anticipated, potentiallyโ dampening economic growth and corporate earnings. Investors โฃwill be closely watching upcoming โeconomic data releases,particularlyโฃ inflation figures,forโ clues about โthe future โขdirection โขof monetary policy.
