European stocks closed sharply lower on Friday as mounting risks to energy supplies drove a surge in energy prices and heightened concerns about stagflation across the region. The Eurozone’s STOXX 50 index fell 1.9%, hitting its lowest level since September, while the pan-European STOXX 600 lost 1.72% to close at 574.
Technology shares led the decline, with ASML and SAP each dropping more than 3.5%, mirroring steep losses in the global tech sector. Banks also came under heavy pressure as sovereign bond markets extended their selloff, eroding the value of lenders’ bond portfolios. UniCredit sank nearly 4%, while BNP Paribas, Intesa Sanpaolo, and Nordea all fell more than 2%.
Adding to the market weakness, hawkish comments from European Central Bank policymakers on Thursday prompted rate traders to price in two interest rate hikes this year, with the first potentially coming as soon as next week.
