The European STOXX 600 index fell by about 0.1 percent, incurring a weekly loss of about 0.4 percent, the largest in three weeks.
Lower interest rates provide cheaper financing for businesses and consumers, which can translate into more business and profits.
But investors have become more cautious after European policymakers warned about monetary easing after June and were keen to avoid exacerbating price pressures, especially if the Federal Reserve continues to delay the easing cycle.
Traders currently expect the European Central Bank to cut interest rates by 55 basis points, down from 67 basis points a week ago.
Euro zone bond yields recorded the largest weekly rise in a month, after a survey showed that business activities in the euro zone expanded at the fastest pace in a year in May, while separate data confirmed that Germany’s economy expanded in the first quarter of 2024.
Stocks that are less sensitive to economic cycles, such as utilities, health care, and food and beverages, were among the hardest hit, while stocks affected by economic cycles such as insurance and the auto sector were among the best performers.
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