Volkswacht Bodensee - Stocks sink on fears over tech rally, US rates

Crude prices rallied as analysts cited risks to Russian oil flows due to Ukrainian strikes and US sanctions.

UK government bonds and the pound slid following reports that finance minister Rachel Reeves has scrapped plans to hike the income tax in her key budget this month.

Analysts said the reports heightened concerns about the health of the UK's public finances.

London's FTSE 100 index shed more than one percent, along with Paris and Frankfurt.

That tracked sharp losses in Asia and on Wall Street.

"It's certainly been a volatile week... with relief over the end of the (US government) shutdown vying with concerns over AI valuations and whether the Fed will cut rates again," said Jim Reid, managing director at Deutsche Bank.

Traders trimmed bets on a December rate cut after several Fed officials voiced concerns about cutting borrowing costs while inflation remained stubbornly high.

For much of the year, equities have been boosted by optimism that rates would come down, and the Fed has delivered at its past two meetings.

But comments from Fed boss Jerome Powell last month that a December repeat was not "a foregone conclusion" sowed the seeds of doubt.

Investors also awaited the release of economic data that had been held up by the record US government shutdown, with jobs and inflation the main focus, even though some are expected to be incomplete.

The dimmer outlook for rates compounded worries that the tech sector may be overpriced after an AI-fuelled surge that sent markets to record highs this year.

All three main indexes on Wall Street ended Thursday in the red, with the tech-rich Nasdaq down more than two percent.

"The tech-sector rout from Wall Street spilled across the globe," on Friday, noted Joshua Mahony, chief market analyst at Scope Markets.

In Asia, Tokyo, Hong Kong, Sydney, Singapore, Wellington, Bangkok and Taipei all shed at least one percent.

Seoul -- which has hit multiple tech-fuelled records of late -- shed nearly four percent, and Manila more than two percent.

Shanghai was hit by fresh data showing growth in Chinese retail sales slowed in October for the fifth successive month, as leaders struggle to revive consumption in the world's number two economy.

Oil prices rallied more than two percent on Friday, rebounding days after the commodity tumbled on OPEC's monthly report which forecast an oversupply in the third quarter.

The International Energy Agency on Thursday flagged risks to Russian output caused by hefty sanctions imposed by Washington last month, including on the country's top two producers.

- Key figures at around 1110 GMT -

London - FTSE 100: DOWN 1.6 percent at 9,655.08 points

Paris - CAC 40: DOWN 1.3 percent at 8,129.66

Frankfurt - DAX: DOWN 1.3 percent at 23,736.01

Tokyo - Nikkei 225: DOWN 1.8 percent at 50,376.53 (close)

Hong Kong - Hang Seng Index: DOWN 1.9 percent at 26,572.46 (close)

Shanghai - Composite: DOWN 1.0 percent at 3,990.49 (close)

Dollar/yen: UP at 154.74 yen from 154.53 yen on Thursday

Euro/dollar: DOWN at $1.1611 from $1.1634

Pound/dollar: DOWN at $1.3129 from $1.3189

Euro/pound: UP at 88.44 pence from 88.21 pence

West Texas Intermediate: UP 2.7 percent at $60.30 per barrel

Brent North Sea Crude: UP 2.4 percent at $64.55 per barrel

L.Stucki--VB