Europe close: Stocks end week on a down note as lockdowns reimposed

European stocks finished lower on Friday as fresh regional lockdowns in France hit investor sentiment.

The pan-European Stoxx 600 was down 0.76% at 423.35, on the back of surging US bond yields overnight and a new four-week lockdown in 16 French regions. France's CAC 40 fell 1.07% at 5,997.96

Oil & gas (-0.91%), banks (-2.27%), and miners (-2.02%) led declines on the Stoxx 600 as the fresh lockdowns dampened hopes of a swift economic rebound.

Weighing on lenders' shares too was the US Federal Reserve's decision overnight to allow the capital break approved during the pandemic to lapse.

Shares in BP, Royal Dutch Shell and Total were all lower as crude prices plunged almost 7% overnight on fears the new lockdowns will hurt fuel demand.

"A stumble from the Dow Jones last night, a shift in policy from the Bank of Japan, frosty words between the US and China, and a third covid-19 wave in France all undermined sentiment this Friday," said Spreadex analyst Connor Campbell.

"Though the Federal Reserve and Bank of England made it clear they wouldn’t be turning the stimulus taps off any time soon, that hasn’t stopped the Bank of Japan’s decision to move to a more ‘sustainable’ monetary policy from upsetting the apple cart."

The US and China have publicly clashed during their first face-to-face high-level talks since Joe Biden took office, suggesting both would take a tough stance as they tried to establish a relationship in the post-Donald Trump era.

In equity news, shares in Telecom Italia fell 7.37% after comments in past days by government ministers over uncertainty around the single broadband network project.

Shopping centre owner Hammerson topped the Stoxx fallers, down 6% after a downgrade to ‘underweight’ at Barclays and to ‘sell’ at Goldman Sachs.

Shares in Swedish casino games developer Evolution Gaming rose 3.8% after Goldman Sachs started coverage with a ‘buy’ rating.