European Shares Tumble Amid Fed's Hawkish Signals

European shares fell as U.S. policymakers dampened hopes for a rate cut. The STOXX 600 dropped 0.9%, with banks down nearly 2% after Fed signals cautioned on easing. However, Richemont saw gains, and Siemens Energy surged 10%. UK stocks lagged due to fiscal concerns.

European shares took a hit on Friday with hawkish commentary from U.S. policymakers crushing prospects for an imminent interest rate reduction, even as the benchmark index closed in on its best week since late September.

The pan-European STOXX 600 fell by 0.9%, standing at 575.41 points by 0810 GMT, led by a sharp decline in banks, which were down nearly 2%. Despite this drop, the index recorded a 1.86% gain for the week. Investors had been looking to U.S. data to signal a slowdown, which would prompt the Federal Reserve to cut borrowing costs in December.

However, this optimism waned after several Fed policymakers advised caution on further easing. Nonetheless, there were positive performances in specific quarters: luxury group Richemont's shares rose 7.8% following stronger-than-expected sales, and Siemens Energy jumped 10% on news of its first dividend in four years fueled by robust demand. Across the channel, UK stocks trailed their continental counterparts amid rising gilt yields and fiscal uncertainty prompted by Finance Minister Rachel Reeves' move to abandon a planned income tax hike.

(With inputs from agencies.)