European shares fell on Friday, hitting session lows after a downturn in US stocks on a tech slide and fears about the Omicron variant of SARS-CoV-2 hitting economic recovery.
The pan-European STOXX 600 erased morning gains to close down 0.57 percent at 462.77 after swinging between losses and gains all week on worries over the potential effect of the newly detected variant, and the US Federal Reserve’s recent hawkish turn.
US jobs growth data disappointed, but that fueled bets that the Fed might push a tightening of the interest rate, and Wall Street declined as tech heavy-weights slipped.
“The next couple of weeks will remain volatile as the focus falls on the latest [US] inflation report, the December 15th FOMC [US Federal Open Market Committee] meeting, and further clarity on the impact with the Omicron variant,” Oanda Corp senior market analyst Edward Moya said.
Data this week showed inflation in Europe surged, with Germany’s hitting highest in decades, but the European Central Bank (ECB) has maintained its “transitory” inflation stance.
The ECB could set policy for a relatively short period at this month’s meeting given heightened uncertainty, ECB President Christine Lagarde said.
IHS Markit’s survey showed that eurozone business activity accelerated last month, but the bounce could be temporary as demand growth weakened and fears about the Omicron variant put a dent in optimism.
The day’s moves pushed STOXX 600 into the red for the week, down 0.28 percent, but London’s FTSE 100, outperformed, up 1.11 percent on the week, for its best such gain since mid-October.
After rising as much as 0.9 percent, the FTSE 100 ended 0.1 percent lower as base metal miners declined.
Limiting losses were oil majors BP PLC and Royal Dutch Shell PLC up 1.3 percent and 0.8 percent respectively as crude prices jumped after the producer group OPEC+ said it could review its policy to hike output at short notice if oil demand collapsed.
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