European markets close lower as banking fears linger; Deutsche Bank and UBS shares slide

This is CNBC's live blog covering European markets.

European stock markets closed lower on Friday as investors took stock of a week of central bank rate hikes and the latest news from the banking sector.

The pan-European Stoxx 600 index closed 1.4% lower, with nearly all sectors posting declines.

European markets

Markets slightly trimmed losses after European Central Bank President Christine Lagarde told EU leaders the euro area banking sector was resilient due to strong capital, liquidity positions and post-2008 reforms. She also said the ECB toolkit was equipped to provide liquidity to the financial system if needed.

But banks dropped 3.8% despite the reassurances. Citigroup this week downgraded the European banking sector to "neutral" from "overweight," citing the effects of continued monetary policy tightening.

Deutsche Bank pared earlier losses to close 8.5% lower, extending a 3.2% fall on Thursday after its credit default swaps, a form of insurance for bondholders, pushed higher.

UBS, Societe Generale, Barclays and BNP Paribas were among the banks to fall sharply.

Oil and gas stocks closed 2.8% lower, construction stocks were down 3.1% and industrials dropped 2.5%.

"Underlying sentiment is still cautious and in this environment no one wants to go into the weekend risk-on," said Nordea chief analyst Jan von Gerich, quoted by Reuters.

The Bank of England hiked its base rate by 25 basis to 4.25% on Thursday in a move that was priced in by markets after U.K. inflation recorded a surprise jump. The Swiss central bank raised its own benchmark interest rate by 50 basis points. Both decisions come in the shadow of the U.S. Federal Reserve hiking by 25 basis points.

Global markets have also been digesting the latest comments from U.S. Treasury Secretary Janet Yellen, who said on Thursday that the emergency actions used to back up Silicon Valley Bank and Signature Bank customers could be deployed again amid concerns over U.S. regional banks.

Asia-Pacific markets closed mixed on Friday, while U.S. stocks dropped during the morning session.

— Silvia Amaro contributed reporting

Yellen’s comments on bank support are worrying for potential spillover into economy, strategist says

Monica Defend, chief strategist at Amundi Institute, discusses market nerves and the situation in European and U.S. banks.

Yellen's comments on bank support are worrying for potential spillover into economy, strategist says
Yellen's comments on bank support are worrying for potential spillover into economy, strategist says

Denmark's Sydbank drops 11%; banking sector down 3.6%

Danish bank Sydbank fell to the bottom of the pan-European Stoxx 600 index in afternoon trading with a fall of 11.3%.

The share price fell to 291.80 Danish krone ($42.01), its lowest point since Dec. 28.

Sydbank joins other European banks at the bottom of the index, including Deutsche Bank, as the sector continues to weather the Credit Suisse fallout and investors consider contagion risk.

The banking sector as a whole was down 3.6%.

— Hannah Ward-Glenton

Oil prices fall over banking sector concerns; oil and gas stocks down 3%

Oil prices fell amid banking sector concerns and after comments from the U.S. Energy Secretary Jennifer Granholm dampened demand prospects.

Granholm told lawmakers Thursday it could take years for the United States to refill its Strategic Petroleum Reserve after oil sales last year pushed the stockpile to its lowest level since 1983.

Both Brent crude and West Texas Intermediate crude futures fell over 4% earlier in the trading session, Reuters reported.

Brent crude was down 1.8% to $74.55 a barrel around 2.45 p.m. London time.

West Texas Intermediate was down 1.8% to trade at $68.70 a barrel.

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Graph to show price of WTI crude.

— Hannah Ward-Glenton

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Matti Lehmus, president and CEO at Neste, discusses how the company is helping to make the aviation industry more environmentally friendly.

Neste CEO: Sustainable aviation fuel aids supply chain efficiency
Neste CEO: Sustainable aviation fuel aids supply chain efficiency

U.S. stocks open lower

U.S. stocks opened lower Friday as a plunge in shares of Deutsche Bank in Europe raised investor fears about the banking sector once again.

The Dow Jones Industrial Average slid 178 points, or 0.55%. S&P 500 dipped 0.48%, while Nasdaq Composite was 0.22% lower.

— Sarah Min

British pound and euro decline against dollar

The euro was down 0.9% against the U.S. dollar at $1.0732 at 1:10 p.m. local time as concerns over the stability of the banking system, which had eased earlier in the week, roared back.

European stocks were in retreat and U.S. stocks were set to open lower.

The British pound, which has broadly held up amid recent volatility which has centered on Swiss banks, was down 0.6% at $1.221.

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Euro-dollar exchange rate.

— Jenni Reid

Euro zone economic output hits 10-month high: PMI survey

Euro zone services sector resurging as economic concerns ease and travel picks up: economist
Euro zone services sector resurging as economic concerns ease: economist

Euro zone economic growth has accelerated to a 10-month high in March, according to the latest S&P composite Purchasing Managers' Index.

There were also signs of inflation easing, jobs growth accelerating and business confidence holding up, the survey found.

However, growth was driven by services, and manufacturing saw a decline in new orders, with output maintained due to backlogs.

A similar trend was seen in the U.K., where services activity increased for the second consecutive month but manufacturing production decreased. Input price inflation was at a two-year low and employment was stable.

— Jenni Reid

Smiths Group CEO: Strong progress in provision of energy transition solutions

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Paul Keel, CEO at Smiths Group, discusses full-year earnings, and how the company is supporting customers in their transition to low and no carbon products.

Deutsche Bank falls 10.7% after spike in credit default swaps

Deutsche Bank posted the steepest losses in morning trade, falling over 10% following a spike in credit default swaps.

Credit default swaps — a form of insurance for a company's bondholders against its default — leapt to 173 basis points on Thursday night from 142 basis points the previous day.

The bank's additional tier one (AT1) bonds also sold off sharply.

Read the full story here.

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Deutsche Bank share price.

— Jenni Reid, Elliot Smith

European stocks are lower

European stocks fell in early Friday trade, with the Stoxx 600 index falling 1.2%.

The U.K.'s FTSE 100, France's CAC 40 and Germany's DAX were all down by around 1.4%.

Among sectors, banks plunged 3.2% as a sharp rise in default insurance costs at Deutsche Bank spooked investors and concerns about the stability of the sector returned.

The German bank was down 9% at 9:50 CET.

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Stoxx 600 index.

— Jenni Reid

UK consumer confidence and retail sales show monthly upticks

A monthly consumer confidence survey from GfK showed U.K. households became more optimistic in February, with improvements in five measures that it records, including views of future financial situations, the ability to fund major purchases and the broader economic picture.

"The headline consumer confidence score is still severely depressed and the mood as well as the economy remain a long way off pre-lockdown levels, but a little consumer resilience might be what we need to soften any downturn in 2023," Joe Staton, client strategy director at GfK, said in the release.

The slight recovery benefited retailers in February, said Gabriella Dickens, senior U.K. economist at Pantheon Macroeconomics, in a note.

U.K. retail sales rose by 1.2% on the month in February, according to national figures also published Friday. The print came in above a consensus expectation of 0.2% and surpassed the 0.9% rise of January.

February retail sales were nevertheless down 3.5% year-on-year. The figure for the three months leading to February was also down 0.3% on the previous three months.

The outlook for retail is mixed, Dickens said, with households avoiding a 1% hit to disposable income because of the ongoing government-funded energy bill cap and suspension of an increase in fuel taxes, as well as rises in the state pension and living wage.

But they will still be affected by other tax measures and by the withdrawal of the energy bill grant program. Figures from the Insolvency Service show an uptick in redundancies in the coming months, while higher mortgage rates will begin to squeeze, Dickens added.

— Jenni Reid

European markets set to open lower

European stock markets were on track to open lower on Friday, according to data from

The FTSE 100 was down 49 points to 7,451. France's CAC 40 was down 48 points to 7,086, Germany's DAX down 72 points to 15,137, and Italy's MIB down 155 points to 25,792.

— Jenni Reid

CNBC Pro: Wall Street downgrades European banks and names stocks to buy "in case markets turn sour"

Wall Street is downgrading European banks after stresses in the sector led to the emergency merger of two large Swiss banks.

Two investments also upgraded another sector and named a dozen stocks to own "in case markets turn sour".

CNBC Pro subscribers can read more here.

— Ganesh Rao

CNBC Pro: Why one fund manager has never owned a bank stock — and reveals what he looks for instead

Some investors are tiptoeing back into bank stocks after last week's selloff, but fund manager Ian Mortimer is steering clear.

In fact, he has never owned a bank stock in any of his funds. He reveals why on CNBC Pro Talks.

Pro subscribers can read more here.

Dividends or growth stocks? Fund manager Ian Mortimer has strategies for both
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— Zavier Ong

Treasury Secretary Yellen says emergency actions to backstop banks could be used again if needed

Treasury Secretary Janet Yellen said Thursday that the federal emergency actions used to backstop Silicon Valley Bank and Signature Bank customers could be used again if necessary.

"We have used important tools to act quickly to prevent contagion. And they are tools we could use again," Yellen said in written testimony before a House Appropriations subcommittee.

"The strong actions we have taken ensure that Americans' deposits are safe," she added. "Certainly, we would be prepared to take additional actions if warranted."

Her comments come as regulators have aimed to reassure customers and investors amid the banking crisis that was promoted by Silicon Valley Bank's closure.

— Alex Harring, Christina Wilkie