European Stocks Close Notably Lower

European stocks closed notably lower on Friday, hurt by some disappointing regional economic data, and concerns about the outlook for interest rates after hawkish comments from officials from Federal Reserve, the Bank of England and European Central Bank.

Fed Chair Jerome Powell said the central bank is not yet confident rates are at a sufficiently restrictive level to bring inflation down to 2% and warned the central bank would not hesitate to resume raising rates.

ECB President Lagarde also said more rate increases are needed to control inflation.

The pan European Stoxx 600 fell 1%. The U.K.’s FTSE 100 dropped 1.28%, Germany’s DAX ended down 0.77% and France’s CAC 40 drifted lower by 0.96%, while Switzerland’s SMI settled with a loss of 0.84%.

Among other markets in Europe, Belgium, Denmark, Finland, Greece, Netherlands, Norway, Poland, Portugal, Spain, Sweden and Turkiye ended weak.

Iceland closed higher, while Austria and Russia ended flat.

In the UK market, Diageo tanked more than 12% after a warning that growth in operating profits will slow in the first half.

Fresnillo ended 4.8% down. WPP, ITV, AstraZeneca and TUI ended more than 3% down.

Barratt Developments, Just Eat Takeaway.com, Anglo American Plc, Easyjet, Burberry Group, Persimmon, British American Tobacco and Prudential ended lower by 2 to 3%.

BAE Systems advanced by about 1.3%. Ferguson, Royal Dutch Shell, BP and Centria posted modest gains.

In the German market, Puma, Zalando and Bayer lost 4 to 4.6%. Siemens Energy, Sartorius, Merck, Qiagen, Vonovia, Fresenius, Adidas, Continental, BASF, Mercedes-Benz, Infineon and Covestro declined 1 to 3%.

Commerzbank and Henkel both gained about 1.25%. E.ON, Hannover Rueck and Munich ended modestly higher.

In Paris, WorldLine dropped about 6.5%. Alstom and Pernod Ricard both shed about 5.5%.

LVMH, Kering, Eurofins Scientific, ArcelorMittal, Publicis Groupe and Teleperformance ended lower by 2 to 4%. Hermes International, Legrand and BNP Paribas also closed weak.

Thales advanced 1.1%. TotalEnergies, Carrefour, Airbus and Veolia posted modest gains.

Danish manufacturer of hearing aids and headsets GN Store Nord A/S soared more than 10% after posting better-than-expected third-quarter results.

In the Swiss market, Richemont declined sharply after reporting weaker-than-expected earnings.

In economic news, the UK economic output stagnated in the third quarter as higher interest rates damped spending and investment, though the economy likely escaped a recession this year.

Gross domestic product posted nil growth in the third quarter after expanding 0.2% in the preceding period, data from the Office for National Statistics revealed. The result was better than the expected fall of 0.1%.

In output terms, there was a decrease of 0.1% in the services sector. The fall offset a 0.1% rise in construction.

At the same time, industrial output remained flat following a 0.5% drop in August. Output was forecast to gain 0.1%.

Manufacturing edged up 0.1%, in contrast to August’s 0.7% fall. Factory output was expected to climb 0.3%.

GDP registered an annual growth of 0.6% in the third quarter. This was slightly faster than the forecast of 0.5%.