European stock markets closed lower on Friday, rounding off a week in which escalating tensions in the Middle East and repricing of interest rate expectations have been in focus.
The regional Stoxx 600 index provisionally ended 0.1% lower. After a strong start to 2024, the index is heading for its first monthly loss since October.
Retail stocks lost 0.6% after U.K. retail sales underperfomed in March, coming in flat on the previous month.
In the latest back-and-forth between the countries, Israel launched a limited direct military attack on Iranian soil early Friday morning, a source familiar with the situation told NBC News.
Oil prices gained on the news, along with safe haven asset gold.
Investors are also monitoring a slew of commentary on the path of interest rates emerging from the International Monetary Fund’s Spring Meetings in New York.
European Central Bank voting member François Villeroy de Galhau told CNBC on Thursday that the institution should cut interest rates in June to avoid falling behind the inflation curve, in a message that echoed ECB President Christine Lagarde.
But markets have become significantly less confident there will be a June cut from the U.S. Federal Reserve or Bank of England, after two hotter-than-expected inflation prints.