European markets drop as tech stocks and carmakers slide

European shares fell on Friday as carmaker and technology stocks led declines amid the prospect of higher interest rates and concern over the situation in Russia and Ukraine.

The pan-European Stoxx 600 index shed 1 per cent, paring some losses after falling as much as 2 per cent earlier in the day. The index lost 1.8 per cent this week, marking its worst performance in more than two months.

Eurozone bond yields rose following the hawkish message that emerged from the US Federal Reserve policy meeting earlier this week.

"There's a whole lot to make investors nervous at the moment, and today seems to be the day European markets are really waking up to what the Fed's increasingly hawkish stance will mean for all that cash sloshing around," AJ Bell financial analyst Danni Hewson said.

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DUBLIN

The Iseq overall index in Dublin managed to rise 0.9 per cent to 8,162.04, aided by a 1.9 per cent gain by building materials giant CRH.

AIB lost 2 per cent to €2.30 after The Irish Times reported that the bank is facing competition from overseas investment groups Pimco and M&G for Ulster Bank's €6.5 billion tracker-mortgage book, which is expected to sell at a discount to par value. Rival Bank of Ireland gained 0.5 per cent to €5.83

FBD Holdings didn't budge on Friday as investors weighed a High Court ruling in relation to a high-profile business interruption text case involving pubs. Still, the stock is expected to be in focus next week, as the company revealed after the Irish market closed on Friday that it is on track to post €100 million pretax profit, well ahead of the €41 million figure expected by analysts.

Kerry Group edged 0.6 per cent higher to €111.65 to shake off disappointing earnings and a share price slump by Swiss peer Givaudan.

LONDON

The blue-chip FTSE 100 fell 1.2 per cent with financials weighing the most after a run of strong gains.

The banking sub-index rose more than 12 per cent this month on support from higher yields, as investors expect lenders to benefit from rising interest rates this year.

The domestically focused mid-cap index fell 1 per cent, and has lost 7.8 per cent over the month, marking its worst month since March 2020. Concerns that rate increases by the Bank of England could slow down a British economic recovery have walloped locally-exposed stocks in recent weeks.

Meanwhile, data showed that the number of shuttered shops in Britain edged lower for the first time in four years in the final quarter of 2021, which supported retail stocks.

Among other stocks, British outsourcer Capita dropped 1.8 per cent after it said it would sell its IT services business Trustmarque to private equity firm One Equity Partners for £111 million (€133.2 million).

EUROPE

Auto stocks skidded 1.8 per cent, with shares in Volvo falling 3.5 per cent after the Swedish truck maker reported lower fourth-quarter core earnings and proposed a smaller-than-expected dividend.

Luxury goods maker LVMH rose 3.2 per cent after saying quarterly sales growth accelerated, while Signify, the world's largest lighting maker, jumped 11 per cent after reporting higher quarterly earnings.

Sweden's H&M gained 5.1 per cent after the fashion retailer posted a bigger profit rise than expected for the September-November period.

Home appliances maker Electrolux dropped 3.5 per cent after saying global supply chain issues will linger and reported a drop in fourth-quarter profit.

NEW YORK

The S&P 500 was ahead in early afternoon trading, as the market neared the end of a tumultuous week marked by heightened volatility as investors considered mixed corporate earnings, geopolitical turmoil and an increasingly aggressive Federal Reserve.

Caterpillar fell following the equipment maker's warning that higher production and labour costs will pressure its profit margin.

Chevron declined on downbeat fourth-quarter profit.

However, Apple jumped, the day after the company posted record iPhone sales in the holiday quarter.

Visa surged following its quarterly earnings beat driven by increased spending on international travel and ecommerce. – Additional reporting: Reuters