European shares log a weekly decline, defence stocks slide

By Anastasiia Kozlova, Johann M Cherian and Tharuniyaa .

European shares slid on Friday and registered a weekly decline as concerns over stretched tech valuations came to the fore again, while defence stocks weakened amid signs of possible progress toward ending Russia’s war in Ukraine.

The pan-European STOXX 600 SXXP fell 0.3% to 562.1 points, after hitting its lowest since late September earlier in the session. The index logged its biggest weekly drop since late July.

Germany's DAX DAX, down 0.8%, hit a six-month low earlier. Spain's IBEX IBC lost 1%.

In the U.S., tech stocks steadied in choppy trade after dragging markets a day earlier, while sentiment improved as traders boosted bets on an interest rate cut by the Federal Reserve next month following remarks from policymakers.

European tech stocks (.SX8P) dropped 2.3% to hit their lowest since mid-September. ASML ASML, ASM International ASM, and BE Semiconductor BESI lost between 4.6% and 6.3%.

Axel Rudolph, senior technical analyst at IG Group, said "the whole day European markets have just been underwater," attributing that to the drag by tech stocks as worries over sky-high valuations in the U.S. persisted. U.S. trading was extremely volatile on the day. [.N}

AI beneficiaries Schneider Electric SU and Siemens Energy ENR slid 2.7% and 10.1%, respectively.

Meanwhile, investors were also monitoring developments around a new U.S.-drafted plan to end the Russian war in Ukraine that would involve downsizing Kyiv's military and major territorial concessions. President Volodymyr Zelenskiy said he would not betray Ukraine's interests.

Europe's defence index (.SXPARO) has been declining since early October and on Friday it fell 3.4% to hit its lowest since August. Renk R3NK was down 8.4% and Rheinmetall RHM was off 7.2%.

An index tracking investor nervousness (.V2TX) spiked 2.7 points to 24.56, hitting its highest since mid-May.

Mining stocks (.SXPP) declined 1.3%, and industrial stocks (.SXNP) lost 1.3%, with Thyssenkrupp TKA falling 9.2%.

Bucking the trend, food and beverage stocks (.SX3P), which investors flock to in times of economic and market uncertainty, rose 2.1%. Healthcare stocks (.SXDP) added 0.8%.

“Out of tech into defensive stocks — that’s where investors seem to be heading as uncertainty over Fed policy and inflation keeps markets on edge,” Rudolph added.

Data showed British retail sales tumbled in October alongside weakening household sentiment, while business growth stalled as November's PMI dropped. UK's FTSE 100 CURRENCYCOM:UK100 index, however, edged up 0.1%.

Among others, German ticketing firm CTS Eventim EVD rose 11.8% after it reported strong third-quarter results and appointed a new CFO.