Key facts
- European shares closed lower for the week due to Middle East conflict and inflation concerns.
- Volkswagen shares surged 6% following the announcement of a transformation plan.
- The transformation plan includes 50,000 job cuts and a turnaround agreement.
- The European autos index rose 1.1%.
European shares closed lower for the week, impacted by Middle East conflict and sticky inflation concerns, although a rally in Volkswagen provided some market stability. The pan-European STOXX 600 index dipped 0.1% to 648.67 points. Germany's DAX saw a slight increase of 0.1%, while London's FTSE and France's CAC 40 both declined by 0.1% and 0.2% respectively.
Volkswagen shares jumped 6% after its supervisory board reached a turnaround agreement, averting further escalation with unions and shareholder Lower Saxony. This news boosted the broader European autos index by 1.1%. The transformation plan includes 50,000 job cuts.
Investors are closely monitoring the August U.S. nonfarm payrolls report for insights into the Federal Reserve's future policy decisions. The recent escalation in the Middle East conflict has driven oil prices higher, contributing to fears of renewed inflationary pressures and causing sell-offs in global equity and bond markets in recent weeks. Brent crude was trading around $96 per barrel on Friday.
Economically sensitive sectors such as chemicals and banking fell by almost 1% each, contributing to the overall decline in the main European stocks index.