Europe close: Stocks end week on a down note

Jitters about the Federal Reserve's short-term path for monetary policy alongside further gains in crude caused a sell-off across European stock markets on Friday, pushing the Stoxx 600 index to a two-week low.

Europe's Stoxx 600 index was down 0.84% at 506.55 with heavy losses of around 1.4-1.6% seen across Spain, Italy, France and Germany, slightly offset by a 0.8% decline on the FTSE 100.

Investors played catch-up after Thursday's losses on Wall Street, shrugging off Friday's gains on the back of a stronger-than-expected reading on the U.S. jobs market.

“Yesterday’s flight to the safety of the dollar has been replaced with buying of that other safe haven, US stocks. The Dow is up 200 points and the Nasdaq 100 has added over 1%," said IG chief market analyst Chris Beauchamp.

"Once more the US economy has demonstrated its overall strength, and while that continues to make a rate cut less likely, it does at least mean than Americans will keep spending. With corporate earnings season just over the horizon, that’s a major relief for investors.”

Brent crude was up 1.2% at $91.85 a barrel, having risen 5% over past five days and 10% over the past month, on the back of escalating tensions in the Middle East along with forecasts for improving demand in the US and China. Heightened oil prices were dampening sentiment on global stock markets given that they accentuated inflationary pressures worldwide.

Back on this side of the Pond, data out on Thursday morning mostly missed expectations.

German factory orders rose by just 0.2% in February, falling short of estimates for a 0.8% jump, but recovering from January's revised 11.4% tumble - the steepest fall since April 2020.

The HCOB eurozone construction PMI unexpectedly dropped to 42.4 in March, down from a reading of 42.9 in February.

Meanwhile, eurozone retail sales were shown to have fallen 0.5% in February after staying flat for the month of January, which was revised down from a 0.1% gain (consensus: 0.4%).

Market movers

Shares of Delivery Hero slipped, pulling back after a strong gain during the previous session after activist investor Sachem Head took a 3.6% stake in the food delivery firm. Sector peers Ocado and HelloFresh also performed badly.

Airlines were under the weather as oil prices continued to rise, with Deutsche Lufthansa, Air France-KLM and IAG falling. In contrast, oil major Shell rose after the company raised its production guidance for the first quarter.

Banking stocks were also out of favour, with the Stoxx Europe 600 Banks Index falling 0.8%. Barclays, Banca Monte dei Paschi di Siena, Banco Santander, UBS and Commerzbank were notable fallers.