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Sterling falls to 37-year low against the dollar; European stocks close down 1.6%

This is CNBC's live blog covering European markets.

The British pound dropped below $1.14 for the first time since 1985 as a combination of dollar strength and recession warnings weighed on the U.K.'s currency.

Sterling fell as low as $1.135 at 8:50 a.m. London time, marking a fresh 37-year low before rising slightly to $1.146 by late afternoon. It followed the publication of figures showing a 1.6% fall in August retail sales, which analysts at ING said showed a "deteriorating consumption picture in the UK."

European markets traded lower amid growth fears, expectations for further rate hikes and continued volatility in the energy market weighed on stocks.

The pan-European Stoxx 600 closed 1.6% lower, with all sectors and major bourses in negative territory.

The U.K.'s FTSE 100 ended 0.6% lower, Germany's DAX was down 1.7% and France's CAC 40 fell 1.3%.

Many sectors were down around 1.5%, including food and beverages and media. Auto stocks fell 1% despite data showing a rise in new car sales in the European Union for the first time in 13 months.

It comes off the back of three days of losses for European stocks, which have particularly dented energy and technology shares. However, banking stocks gained on Thursday after Morgan Stanley analysts upgraded the sector.

The World Bank on Thursday warned of a global recession in 2023 and said central bank hiking may not be enough to bring down inflation.

Asia-Pacific shares fell Friday, with the Shanghai Composite 2.3% lower, despite China's industrial production and retail sales figures for August beating expectations.

Analysts at ANZ said stocks and risk-sensitive markets would continue to struggle with inflation fears and expectations of Federal Reserve rate hikes next week.

U.S. stock futures were also lower, with Wall Street heading towards a big losing week.

Fortum shares up over 7% after power capacity announcement

Shares of Finnish utility firm Fortum rose 7.4% after the company announced plans to add 560-megawatt capacity to the Nordic power market after October. 

Fortum said it would reactivate an idle coal-fired power plant on the country's west coast. The decision was made after the Finnish Energy Agency dropped the plant from Finland's peak-load capacity reserve.

The company will also adjust the procurement of the coal supply and chemicals needed for commercial operation. 

State-owned power transmission system operator Fingrid welcomed the news to bring additional capacity to the energy market as supply remains tight due to lost Russian supply.

— Hannah Ward-Glenton

U.S. stocks open lower

U.S. stocks opened lower Friday as traders absorbed downbeat signals about the global economy.

The Dow Jones Industrial Average started trading down 1.1%, while the S&P 500 was 1% lower and the Nasdaq was down 1.25%.

— Karen Gilchrist

Telecom Italia resumes trading, shares down 7.7%

Shares of Italy's Telecom Italia have resumed trading after being automatically halted due to a 7.89% drop, Reuters reported.

The cause was not immediately clear.

The debt-heavy company is reportedly preparing to sell a minority stake in its enterprise service arm. It was last seen trading down 7.7%.

— Jenni Reid

Euro zone's 9.1% inflation confirmed

Bruno De Hogues | Photolibrary | Getty Images

Euro zone inflation rose by a record high of 9.1% year-on-year in August, the EU's statistics office said, confirming an earlier flash estimate.

Consumer price inflation was up by 0.6% month-on-month, a revision up from 0.5%. Core inflation, with energy and food excluded, rose by 5.5% annually.

France had the lowest inflation in the euro zone, at 6.6%, after announcing price caps on energy. Inflation in the Baltic states has soared above 20%.

The European Central Bank raised interest rates by 75 basis points last week to combat rising prices.

— Jenni Reid

Stocks on the move: Royal Mail, Uniper

The U.K.'s Royal Mail and German energy giant Uniper were the biggest fallers in morning trading as European stocks declined.

Royal Mail was down 10%, with postal service workers set to strike twice over pay in the coming fortnight.

Uniper, which is in nationalization talks with the German government, fell 9.8%. Its share price has plummeted this year amid the European energy crisis.

Germany announced it had taken over a subsidiary of Russian oil giant Rosneft on Friday, giving it control of a key source of fuel for the city of Berlin.

— Jenni Reid

German two-year yield rises to 2011 high

The two-year yield on German government bonds hit its highest level since 2011, continuing a two-month rise on expectations of further rate hikes.

Two-year bund yields were up 8 basis points on the day to 1.59% at 11:40 a.m. CEST. Yields move inversely to prices, and a basis point is equal to 0.01%.

In August, German bond yields climbed at their highest rate in decades.

— Jenni Reid

Sterling falls to fresh 37-year low against dollar

The British pound has dropped below $1.14 for the first time since 1985.

Sterling fell as low as $1.135 at 8:50 a.m. London before rising slightly to $1.137.

The pound has plummeted against the greenback this year on a combination of dollar strength and U.K. recession warnings. Data published Friday morning showed U.K. retail sales fell more than expected in August.

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— Jenni Reid

European new car sales return to growth

New car registrations in the European Union rose in August after thirteen months of declines.

Sales increased by 4.4% overall and rose in the key markets of Spain, Italy, Germany and France, though remained well below pre-pandemic levels, the European Automobile Manufacturers' Association said.

In the year to date, total sales volumes are down by 11.9%, largely due to an ongoing semiconductor shortage.

— Jenni Reid

Germany takes control of Russian-owned refinery

PCK Schwedt oil refinery in Schwedt, Germany on Monday, May 9, 2022.
Krisztian Bocsi | Bloomberg | Getty Images

The German subsidiary of Russian oil giant Rosneft was placed under trusteeship on Friday, giving Germany's federal regulator control of the PCK refinery in Schwedt, a key source of fuel for the city of Berlin.

Read more here.

Reuters

U.K. retail sales fall more than expected in August

U.K. retail sales fell by 1.6% month-on-month in August, figures published Friday morning showed.

Economists had forecast a 0.5% dip after a 0.4% rise in July. It was the first month since July 2021 that all main sectors, spanning food and non-food stores, online retail and fuel, saw declines.

Analysts said it showed the cost of living crisis was causing consumers to pull back on spending across the board, and Olivia Cross, assistant economist at Capital Economics, said retail sales would struggle in the months ahead.

— Jenni Reid

CNBC Pro: Top tech investor Paul Meeks picks between Apple and Samsung

Tech stocks suffered yet another sell-off this week as investors digested a hotter-than-expected August inflation report.

Amid a tough year for the sector, some investors are seeking refuge in the relative safety of mega-cap stocks. Top tech investor Paul Meeks weighs in on two such stocks and reveals which he prefers in the current environment.

Pro subscribers can read more here.

— Zavier Ong

Oil prices climb after sliding to weekly low

Oil prices climbed on Friday, after sliding 3.5% to a weekly low in the previous session on the back of demand concerns.

Brent crude futures rose 0.4% to stand at $91.20 per barrel, while U.S. West Texas Intermediate rose 0.28% to $85.34 per barrel.

— Lee Ying Shan

U.S. 2-year Treasury yield briefly touches 3.9%

The yield on the U.S. 2-year Treasury note briefly reached 3.901%, before pulling back slightly to 3.8921% in Asia's morning trade.

That's the highest level since 2007. Yields move inversely to prices, and a basis point is equal to 0.01%.

The 10-year Treasury yield was last at 3.4567% after touching 3.459%, while the yield on the 30-year Treasury bond was lower at 3.4743%.

— Abigail Ng

CNBC Pro: What's next for the sinking yen? Here's what the pros say

The Japanese yen has fallen sharply against the U.S dollar this year and is now hovering near 24-year lows.

Amid reports that that Japan may intervene to prop up the currency, CNBC Pro spoke with foreign exchange analysts for their thoughts on intervention and where they see the dollar-yen heading next.

Pro subscribers can read more here.

— Zavier Ong

China's retail sales, industrial production for August beat estimates

China's latest economic data release showed growth accelerated in August.

Retail sales increased 5.4% in August from the same period last year, much higher than July's 2.7% and also above the Reuters forecast of 3.5%.

Industrial production grew 4.2% last month compared with a year ago, topping the prediction of 3.8% in a Reuters poll. Industrial output came in at 3.8% in July.

Fixed asset investment for January to August this year increased by 5.8%, beating the 5.5% estimate from Reuters.

— Abigail Ng, Evelyn Cheng