European markets close the week negative

European shares closed the week on a negative note, reaching session lows after a slump in U.S. stocks on a tech slide and concerns around the Omicron coronavirus variant hurting the economic rebound.

The pan-European STOXX 600 lost morning gains to end down 0.6% after moving between losses and gains all week on concerns over the possible influence of the newly discovered variant, and the U.S. Federal Reserve’s recent aggressive turn.

U.S. jobs growth data disappointed, but that led to expectations that the Fed may consider pushing tightening the interest rate. However, Wall Street was negative as tech heavy-weights lost ground.

Data published this week showed inflation in Europe rose, with Germany’s reaching its highest in decades. However, the European Central bank has retained its ‘transitory’ inflation position. The ECB may set policy for a relatively short period at this month’s meeting considering the increased uncertainty, President Christine Lagarde told Reuters.

IHS Markit’s survey showed euro zone business activity accelerated last month, but the rebound may be short-term as demand growth diminished and concerns about the Omicron variant hit optimism.

On Friday basic resources sector was the worst performer in Europe, shedding 2.5% as copper and iron ore prices decreased, while tech stocks followed U.S. peers lower.

The day’s movements pushed STOXX 600 into the red for the week, down 0.3%. London’s FTSE 100, outperformed, up 1.1% on the week, for its best performance since mid-October.

Recent global economic growth forecasts from the International Monetary Fund are likely be downgraded due to the discovery of the Omicron variant, said IMF Managing Director Kristalina Georgieva. Omicron has positioned itself in many countries worldwide and many governments have restricted travel rules to control the variant.

Crude prices edged higher after producer group OPEC+ said it could review its policy to increase output at short notice if a rising number of pandemic lockdowns reduces demand.