Europe close: Markets end week of gains in the red

European stocks ended Friday weaker after a choppy start to the day, putting a dampener on a week of solid gains as traders cashed in their profits.

The benchmark Stoxx Europe 600 index was down 0.86% to 326.08, Germany’s DAX was off 1.07% to 9,362.29 and France’s CAC 40 was 0.6% weaker at 4,214.34.

"The winning streak that began late last week and followed through to the first half of this week has been snapped. US Oil back below $30 per barrel juxtaposed against a higher reading on US inflation have added complexity to the next move in US interest rates," said Jasper Lawler, markets analyst at CMC Markers.

"The correlation between equities and oil remains enduringly high."

Oil prices slid even further during late trading in Europe. They were already down significantly after data out Thursday from the US Energy Information showed crude inventories rose by 2.1m barrels last week to 504.1m barrels.

West Texas Intermediate was last down 4.95% to $29.32 a barrel while Brent crude was 3.97% weaker at $32.97. The Stoxx 600 oil and gas index fell 1.16%.

On the corporate front, Allianz slipped 1.73% after the German insurer’s fourth quarter profit missed analysts’ expectations.

Aegon slid 4.21% after the Dutch insurer’s fourth quarter earnings missed consensus forecasts.

AstraZeneca dipped 1.37% despite saying the European Commission has granted marketing authorisation for its Zurampic and Brilique drugs.

Kering, which was in the black earlier in the session, ended the day down 0.56% despite the French luxury goods maker posting better-than-expected fourth quarter revenue.

Air Liquide was one of few in the black at the end of trading, up 0.81% as it continued to ride the news out late on Thursday that it was in talks with Iran to build a large propylene-via-methanol plant.

US inflation data for January came in the afternoon, and was better than consensus predictions. Year-on-year, the consumer price index rose 1.4%, up from 0.7% in December. Economists had picked a rise of 1.3%.

"The dollar is not pushing downgoods prices to the extent signalled by past experience, and that is allowing the clear upward trend in services inflation to drive up the aggregate," said Pantheon Macroeconomics chief economist Ian Shepherdson.

"Investors need to forget all about the idea that a strong dollar means you never need to worry about inflation, and quickly. A March rate hike is still on the table."

Eurozone consumer confidence also came in during the afternoon, and at -8.8 was markedly lower than January at -6.6. Economists had predicted the month's measure to come out at -6.3.

Investors also seemed spooked by figures from Destatis, out early in the day, which showed German producer prices fell more than expected in January.

They were down 0.7% in the first month of 2016, compared with a 0.5% drop in December. Economist predictions of a 0.3% decline were off by a wide margin.

On a yearly basis, prices were 2.4% weaker compared with a 2.3% drop the previous month. This was also steeper than the 2% fall forecast by economists.