European stocks fell again on Friday as worries grew about rising inflation. The concern is mainly linked to higher oil prices caused by the ongoing war in the Middle East.
The STOXX Europe 600 closed down 0.6%, marking its seventh drop in nine trading sessions this month. Since the conflict began, the index has lost about 5.6%.
Oil prices have surged, reaching $100 per barrel. At the same time, two fuel tankers were attacked by boats in Iraqi waters, highlighting rising tensions in the region and their direct impact on energy markets.
Higher oil prices are raising fears of stronger inflation across Europe. The region relies heavily on imported crude oil, and more expensive energy could put even more pressure on an already slow economy.
Data from the London Stock Exchange Group showed that investors now expect the European Central Bank to raise interest rates by July. Markets also see an 87% chance of another rate hike by December. This is a big shift from earlier expectations, when investors believed the bank might cut rates before the conflict started.
Looking at different sectors, banking stocks fell sharply by 3.5%, while energy stocks rose 1.4% and utility stocks gained 1.8%.
