European stocks down on profit taking

European stocks fell on Friday as investors booked profits in highflying technology shares due to concerns over rising inflation and interest rates on the back of a jump in bond yields.

The benchmark European stock index was down 0.6%, paring earlier losses but still on track to record its first weekly fall this month. London’s FTSE 100 slipped 0.2% and Germany’s DAX lost 0.1%, both well off session lows.

Asian markets fell to a onemonth low, while the dollar rose from a three-year trough as the 10-year U.S. Treasury yield hit a one-year high, sparking fears the heavy losses could trigger distressed selling in other assets.

Euro zone government bond yields, however, stabilised on Friday, although Germany’s benchmark yield was still headed for its biggest monthly jump since 2016. Technology stocks bore the brunt of this week’s sell-off after powering the global stock market recovery last year as assurances from European Central Bank chief Christine Lagarde and other policymakers failed to stem the rise in yields.

Still, the benchmark STOXX was tracking its best monthly gain since November, helped by a rotation into energy, banking and mining stocks on expectations of a pickup in business activity following vaccine rollouts. Better-than-expected fourthquarter earnings have also reinforced optimism about a quicker corporate rebound this year.

Germany’s Deutsche Telekom gained 0.3% after it reported forecast-beating fourth-quarter results as its merged U.S. unit TMobile continued to drive growth. British Airways-owner IAG gained 3.2% even after it recorded a Eur7.43 billion loss last year and warned it could not say when normal flying conditions would return.

The jump in yields has tarnished gold, which offers no fixed return, and dragged it down 0.1% to $1,767.81 per ounce, having earlier fallen to its lowest since June 26. Oil prices dropped on a higher dollar and expectations of more supply. U.S. crude fell 1.5% to $62.57 per barrel and Brent also lost 1.3% to $66.02.