European Stocks See Biggest Drop in Over Five Weeks Amid Inflation Concerns

European stocks dropped on Friday, marking their largest decline in over five weeks. Persistent U.S. price pressures and a recovering euro zone economy dashed hopes for interest rate cuts from major central banks this year. The STOXX 600 dropped 0.7%, impacted by weaker U.S. and European economic data.

European stocks lost ground on Friday, set for their biggest percentage drop in more than five weeks, as signs of persistent U.S. price pressures and a recovering euro zone economy dashed hopes of interest rate cuts from major central banks this year.

The pan-European STOXX 600 index was down 0.7%, as of 0710 GMT. U.S. stocks closed sharply lower on Thursday as an initial euphoria following upbeat outlook from chip giant Nvidia faded after economic data showed inflation was still a concern, potentially delaying any Federal Reserve rate cuts.

The German two-year bond yield hit its highest in six months on Thursday after a survey showed euro zone business activity has expanded at its fastest pace in a year this month. It traded just below those levels on Friday. Europe's rate-sensitive technology shares took the biggest hit, down 1.4%, followed by utilities and banks .

Shares of Renault rose 2.4% after the French carmaker announced a share buyback plan and UBS upgraded the stock to "neutral" from "sell". Britain's National Grid rebounded nearly 8% after Thursday's more than 10% plunge when it announced plans to raise about 7 billion pounds ($8.9 billion).

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