European stocks dropped for a fifth straight session on Friday, with the German market leading the charge south after Deutsche Bank posted a bigger-than-expected loss in the fourth quarter.
A continued sharp rise in bond yields also weighed on European equities, sparking a pullout of money from stocks. The region’s key index is poised to post its biggest weekly loss in six months.
What are markets doing?
The Stoxx Europe 600 index SXXP, -1.07% lost 0.5% to 391.46. It is on track to post a weekly decline of 2.3%, which would mark its worst week since August.
Germany’s DAX 30 index DAX, -1.53% slid 0.8% to 12,903.75, shaping up for its worst week since June last year, down 3.1%
France’s CAC 40 index PX1, -1.35% gave up 0.6% to 5,420.15, while the U.K.’s FTSE 100 index UKX, -0.32% slipped 0.1% to 7,485.11.
The euro EURUSD, -0.1999% fell to $1.2498, after reaching a three-year high around $1.2507 late Thursday in New York.
The pound GBPUSD, -0.3436% dropped to $1.4228, down from $1.4261 on Thursday.
What is driving the market?
The banking sector pulled the overall European market lower, as the Stoxx 600 banks index FX7, -1.31% declined 0.7%.
Those losses were led by a 5.7% slide for Deutsche Bank AG DBK, -7.22% DB, +1.69% after the lender posted its third consecutive full-year loss. The German bank said it would have been profitable in 2017 without an already-announced hit from the U.S. tax overhaul adopted in December.
Rising government bond yields also kept a lid on stocks on Friday. That continued a trend that started earlier in the week, when U.S. Treasury yields rallied on fears U.S. inflation will rise faster than expected.
On Friday, the yield on 10-year German government bunds TMBMKDE-10Y, +3.04% added 4 basis points to reach 0.690%, trading around its highest level in more than two years.
Higher returns on debt securities typically make stocks and other assets perceived as risky less attractive to investors.
Later in the day, attention turns to the U.S. monthly jobs report, seen as important to the Federal Reserve’s decision-making on interest rates. The nonfarm payrolls report comes out at 8:30 a.m. Eastern Time, or 1:30 p.m. London time.
Which stocks are in focus?
Danske Bank AS DANSKE, +1.40% rose 2.3% after its fourth-quarter profit beat forecasts and the Danish lender told shareholders that they can expect bigger payouts in the future.
AstraZeneca PLC AZN, -1.21% AZN, +0.23% gave up 2.1% after the U.K. drug maker said pretax profit fell 81% in the fourth quarter, citing increased costs.
Shares of BT Group PLC BT.A, -5.20% dropped 2.3% after the British telecoms company reported earnings that missed forecasts after revenue fell in the third fiscal quarter.