Volkswacht Bodensee - European stocks slump at end of volatile week for markets

The week's trading has been dominated by Federal Reserve policy as the US central bank seeks to battle decades-high inflation by embarking on a series of interest rate hikes that could derail strong growth rebounds following pandemic lockdowns.

By contrast, the European Central Bank is sitting tight, putting pressure on the euro which Friday struck a 19-month low versus the dollar.

Rising tensions between Russia and the West over the Ukraine crisis are adding to the fractious mood on trading floors, where a selling frenzy this month wiped around $7 trillion off valuations around the world.

"Downbeat mood rounds up a volatile week for markets," said Victoria Scholar, head of investment at Interactive Investor.

"After an indiscriminate tech rout in recent weeks amid concerns about rising rates from the Fed, earnings season is helping to separate the wheat from the chaff with companies like Apple and Microsoft... managing to buck the broader weakness."

Apple on Thursday reported record quarterly revenue of $124 billion despite a global chip pinch and shifting impacts of the pandemic that have weighed down other big tech players.

Traders were also digesting growth data out of Europe's biggest economies.

The German economy ended 2021 on a downward note, shrinking by 0.7 percent in the fourth quarter as bottlenecks and coronavirus restrictions took their toll, official figures showed.

Last year Germany's economy grew by 2.8 percent, Friday's data added, far slower than its neighbour France, which expanded seven percent in 2021.

While stock markets have rallied for the best part of two years to record or multi-year highs, analysts said a hefty pullback is to be expected, owing to profit-taking and the removal of massive pandemic-era stimulus by central banks and governments.

- Oil gains -

Crude oil prices remained well supported after a strong trading week, aided by the Ukraine-Russia crisis.

"Russia's supply of natural gas to Western Europe could further spark volatility across financial markets, and as we turn the corner on the pandemic we now see a possible conflict as one of the biggest threats to markets in 2022," predicted Federated Hermes analyst Lewis Grant.

On Wall Street, all three main indices ended Thursday in the red, with the Nasdaq leading the way again as tech firms are more susceptible to higher borrowing costs.

- Key figures around 1145 GMT -

London - FTSE 100: DOWN 1.1 percent at 7,467.90 points

Frankfurt - DAX: DOWN 1.9 percent at 15,225.52

Paris - CAC 40: DOWN 1.6 percent at 6,909.83

EURO STOXX 50: DOWN 1.9 percent at 4,105.33

Tokyo - Nikkei 225: UP 2.1 percent at 26,717.34 (close)

Hong Kong - Hang Seng Index: DOWN 1.1 percent at 23,550.08 (close)

Shanghai - Composite: DOWN 1.0 percent at 3,361.44 (close)

New York - Dow: FLAT at 34,160.78 (close)

Euro/dollar: DOWN at $1.1132 from $1.1147 late Thursday

Pound/dollar: UP at $1.3387 from $1.3381

Euro/pound: DOWN at 83.15 pence from 83.27 pence

Dollar/yen: UP at 115.59 yen from 115.36 yen

Brent North Sea crude: UP 0.6 percent at $88.70 per barrel

West Texas Intermediate: UP 0.7 percent at $87.22 per barrel

F.Pavlenko--BTB