European markets close higher to end bruising quarter; Stoxx 600 notches worst month since June

This is CNBC's live blog covering European markets.

LONDON ― European markets closed higher on Friday but not by enough to reverse losses over a torrid month.

European markets

The pan-European Stoxx 600 provisionally closed up 1.3%, as construction stocks gained 2.4% and media stocks added 2.3%. Household goods and utilities were flat for the session.

However, the last trading day of September saw the blue-chip index down 7.8% over the month — its worst performance since June — and down 6% over the third quarter.

Global stocks have struggled amid fears over slowing growth and aggressive monetary policy tightening.

Shares in Asia-Pacific retreated on Friday following the overnight plunge stateside, though new data showed Chinese factory activity unexpectedly expanded in August.

Volatility continues in U.K. markets after the Bank of England intervened in the bond market on Wednesday in order to shore up the country's financial stability, after a historic sell-off in long-dated gilts.

Sterling also hit an all-time low on Monday following the new government's widely condemned fiscal policy announcements, but has staged a significant rally in recent days and hit a week-high on Friday.

Stateside, several Fed officials are due to speak on Friday afternoon, and the markets will be watching closely for indications as to the pace of future rate hikes from the central bank.

European stocks record worst month since June and 6% quarterly fall

European stocks ended Friday 1.3% higher following a muted relief rally but ended September with sharp losses.

The Stoxx 600 index fell 7.8% through the month, its worst performance since June, and 6% through the third quarter.

The period saw the intensification of the European energy crisis as a standoff with Russia over gas supplies and prices continued, and the U.K. plunged into market volatility after the release of a controversial budget.

— Jenni Reid

Trading in Italy's MediaForEurope paused after sharp rise

Shares of Italian broadcasting and communications group Media For Europe were automatically halted after rising 10.68%, Reuters reported.

MFE was founded by former Italian Prime Minister Silvio Berlusconi and his son, Pier Silvio Berlusconi, its chief executive. The company has dropped 81% in value over the last year and reported a 44% fall in first-half profits earlier this week.

— Jenni Reid

Stocks on the move: Clariant up 6%, Puma down 7%

Clariant shares climbed 6% by mid-afternoon after Credit Suisse upgraded the Swiss chemicals company's stock to "outperform" from neutral and upped its price target.

French commercial real estate company Unibail-Rodamco-Westfield also added 6%.

At the bottom of the European blue chip index, German sportswear brand Puma fell 7% after U.S. rival Nike flagged inventory concerns. Puma's domestic peer Adidas also fell 5%.

- Elliot Smith

Euro zone inflation soars to record high of 10% in September

Euro zone inflation hit a new record high of 10% in September, Eurostat data showed on Friday, up from 9.1% in August and above consensus projections of 9.7%.

The reading, which also showed price increases broadening out from volatile food and energy prices into nearly all segments of the 19-member bloc's economy, will exert more pressure on the European Central Bank to hike interest rates aggressively at its October meeting.

- Elliot Smith

Sterling recovers to pre-plunge levels as Bank of England and government act

The British pound rose to fresh one-week highs on Friday against both the dollar and the euro, recovering from the steep losses that send it to an all-time low on Monday.

Sterling gained 1% against the greenback on Friday morning to trade above $1.12 before moderating slightly. During Asian trading hours on Monday, the pound slid to just above $1.03 on the back of a widely-criticized set of fiscal policy announcements from the U.K. government.

The Bank of England on Wednesday intervened in the U.K. long-dated bond market to secure the country's financial stability after huge sell-offs in the currency and fixed income markets.

Markets are also taking reassurance after news that British Prime Minister Liz Truss and Finance Minister Kwasi Kwarteng will meet with the U.K.'s independent finance watchdog for talks on Friday.

- Elliot Smith

UK economy unexpectedly grew in second-quarter, but remains below pre-Covid levels

The U.K. economy expanded by 0.2% in the second quarter, according to revised data published Friday, up from an initial estimate of a 0.1% contraction.

However, the Office for National Statistics reiterated that the economy continues to slow, and GDP remains below its pre-pandemic peak.

The ONS revised down its estimate for Britain's Covid-19 recovery, and now says U.K. GDP contracted by 11% in 2020, during the height of lockdowns, sharply lower than the previous estimate of a 9.3% fall.

"The level of real quarterly GDP in the U.K. is now 0.2% below its pre-coronavirus (COVID-19) pandemic level in Quarter 4 (Oct to Dec) 2019," the ONS said.

- Elliot Smith

French inflation eases in September for second straight month

French inflation cooled for a second consecutive month in September, diverging from neighboring Germany on the back of a deceleration of price increases in energy and services.

National statistics agency INSEE said Friday that France's EU-harmonized inflation rate dropped to 6.2% annually in September from 6.6% in August, defying market projections for a modest acceleration.

- Elliot Smith

British Prime Minister Liz Truss to have emergency talks with budget forecasters

British Prime Minister Liz Truss and her Finance Minister Kwasi Kwarteng will meet the U.K.'s independent finance watchdog for talks on Friday, as sterling returns to pre-mini-budget levels.

Following the mini-budget on Sept. 23 the pound plummeted to a record low, the Bank of England intervened as gilt yields skyrocketed and swaths of mortgage deals were pulled as banks feared rates would become unaffordable.

The Office for Budget Responsibility will reportedly provide a draft report on the U.K.'s finances for Oct. 7.

— Hannah Ward-Glenton

Stocks on the move: Clariant up 6%, Wise down 5%

Clariant shares climbed 6.4% in early trade to lead the Stoxx 600 after Credit Suisse upgraded the Swiss chemicals company's stock to "outperform" from neutral and upped its price target.

At the bottom of the European blue chip index, London-based fintech company Wise slid 5% following the publication of its earnings report on Thursday.

- Elliot Smith

Here are the opening calls

Britain's FTSE 100 is expected to open around 13 points lower at 6,869, Germany's DAX is set to gain around 9 points to 11,984 and France's CAC 40 is seen around 6 points higher at 5,683.

CNBC Pro: Is the Fed on the right track? Wall Street veteran Ed Yardeni says this is what it should do next

The U.S Federal Reserve announced yet another 75 basis point hike earlier this month, sending the federal funds rate up to a range of 3% to 3.25%. The central bank also signaled it may raise interest rates up to as high as 4.6% in 2023 to control inflation.

Ed Yardeni, the economist who coined the term "bond vigilantes," gives his take as the Fed's response to inflation comes under intense scrutiny.

Pro subscribers can read more here.

— Zavier Ong

CNBC Pro: Here's how to trade the UK's political and market turmoil, fund managers say

Markets in London have been in turmoil ever since the U.K. government announced its so-called "mini-budget."

The chaos driven by recent political events has seen the Sterling tank to new historic lows against the dollar as many overseas investors pulled out of the country.

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Three fund managers have named stocks and sectors that may benefit from the sell-off in the country's currency.

CNBC Pro subscribers can read more here.

— Ganesh Rao