European stocks advanced on Friday, with the STOXX 50 up 0.5% and the STOXX 600 gaining 0.3%, partially recovering from recent losses that had pushed both indices to their lowest levels since July. The rebound coincided with a slight pullback in oil prices, even as geopolitical tensions in the Middle East remained high.
Banking stocks were among the strongest performers, with Banco Santander climbing 1.3% and BBVA adding 1%. Industrial and aerospace names also traded higher, led by Airbus (+1.6%), Safran (+2.0%) and Siemens (+1.1%). In contrast, SAP slipped 1.6%.
Despite Friday’s gains, European equities ended the week sharply lower. The STOXX 50 declined 1.9% over the week and the STOXX 600 fell 2.2%, their steepest weekly drops since April. Rising energy costs have intensified concerns about a renewed upturn in inflation, reinforcing expectations that central banks will keep monetary policy tight. As anticipated, the ECB raised its key interest rate by 25 bps yesterday. Markets are now pricing in three further rate increases by March 2027.
