Tech stocks drag European shares lower

European shares slipped on Friday after hawkish remarks from U.S. central bank officials fanned worries about the impact of tighter monetary conditions, with technology stocks on track for their second straight weekly decline.

The pan-European STOXX 600 shed 0.7%, tracking weaker global markets amid nervousness after Federal Reserve Governor Lael Brainard became the latest and most senior U.S. central banker to signal that rates will rise in March to combat inflation.

Nearly all sectors and regional stock indexes were in the red. Tech stocks led losses with a 1.4% drop, while bank stocks were among the slimmest decliners.

“European stocks have taken the cue from falls in Asia and the U.S. amid expectations there will be a much more aggressive stance taken to combat soaring inflation,” Hargreaves Lansdown (LON:HRGV) analyst Susannah Streeter said.

The STOXX 600 is on course for its second consecutive week of declines in 2022, while a rotation from growth to value stocks, said to be a key theme for markets over the weeks to come, is on course to prompt a 0.7% drop in tech stocks so far this week.

The euro zone inflation spike is not as transitory as earlier thought and price growth could exceed projections, European Central Bank Vice President Luis de Guindos said Thursday.

No breakthrough was reached at meetings between Russia and Western states, at a time Russia has massed more than 100,000 troops at its frontier with Ukraine.

“There’s increased nervousness around an escalation in tensions … as traders wait for the next move from diplomats,” Streeter said.

Utilities fell 1.2%, weighed down by a 21.5% plunge in power group EDF (PA:EDF) after France ordered the state-controlled firm to sell more of its cheap nuclear power to smaller competitors to limit electricity price rises in the country.

Among other stocks, German business software giant SAP reversed early gains to trade flat after saying fourth-quarter revenue from its cloud computing business jumped 28%.

Europe’s third-largest insurer Assicurazioni Generali (MI:GASI) dropped 1% after announcing director Francesco Caltagirone has resigned from the board amid a boardroom spat between top investors.

Silicon specialist Wacker Chemie jumped 4.7% after saying 2021 earnings were above its own target range and beat analyst expectations.

Tech stocks drag European shares lower