European stocks recorded their worst weekly performance since August, with risk-off sentiment hitting some of this year's biggest winners amid concerns over stretched tech valuations and uncertainty around U.S. monetary policy.
The Stoxx Europe 600 index closed 0.3% lower, extending its weekly decline to 2.2% since Monday. The index recovered from session lows after New York Fed President John Williams suggested there remains room for further rate cuts by the Federal Reserve.
Energy and technology sectors led Friday's declines, while defensive sectors like food & beverages and personal care outperformed. Media and travel stocks also ranked among top gainers. The Swiss Market Index rose 0.7%, supported by safe-haven demand.
Despite announcing a major share buyback program, Siemens Energy dropped 10% as investors took profits on this year's top performers.
As year-end approaches, investor caution has intensified, pulling the Stoxx 600 lower. Market participants await clearer evidence that massive AI investments are yielding results while growing skeptical about the timing of the Fed's next rate cut.
Investors are also monitoring developments in negotiations aimed at ending the Russia-Ukraine conflict. Kyiv's key European allies have aligned with President Zelenskyy in opposing critical elements of a U.S.-Russia brokered peace proposal.