European markets close lower on prospect of higher for longer rates; AstraZeneca up after positive drug trial

This is CNBC's live blog covering European markets.

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LONDON — European markets closed lower on Friday as the prospect of higher for longer interest rates emerged from a slew of central bank decisions this week.

European markets

The pan-European Stoxx 600 index ended the session down 0.3%, taking its losses for the week to 1.57% — its worst performance since mid-August, according to LSEG data. Construction and material stocks dropped 0.9% Friday, while tech stocks added 0.77%.

Global stock markets have endured a rough few days. The U.S. Federal Reserve held interest rates steady on Wednesday but struck a hawkish tone, signaling that a further hike is on the cards later this year and that rates will likely stay elevated for a prolonged period as the central bank looks to exert sustained downward pressure on inflation.

Fed Chairman Jerome Powell reiterated that the top priority is restoring price stability and ensuring that inflation won't rear its head again.

On Thursday, both the Bank of England and Swiss National Bank opted to end their respective runs of interest rate hikes, though both emphasized that there is no room for complacency and that further increases and more sustained higher rates are on the table. Both the Swedish and Norwegian central banks hiked interest rates.

The Bank of Japan on Friday left interest rates unchanged at -0.1%, while maintaining its outlook and yield curve control policy, showing no impetus to end its massive economic stimulus measures.

Shares in Asia-Pacific finished mixed on Friday, paring earlier losses, while U.S. stocks rose despite a bruising week for the major Wall Street indexes.

Ocado recovers some losses after sharp fall

Shares of grocery delivery group Ocado were 6.3% higher in late trade, clawing back some losses after plunging 20% Thursday in its worst session since June 2012.

The fall appeared to be triggered by a downgrade by Exane, which moved to the stock to  "underperform" as it said the risk-reward balance had become "out of kilter again," according to a Reuters citation.

The stock has been choppy over the last year amid takeover speculation, and remains roughly 23% higher over the period.

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Ocado share price.

— Jenni Reid

Huge concern about the demand outlook for Europe’s biggest economies, economist says

Huge concern about the demand outlook for Europe’s biggest economies, economist says
Huge concern about the euro zone demand outlook, economist says

Chris Williamson, chief business economist at S&P Global Market Intelligence, discusses the economic outlook for the euro zone and reflects on the latest data.

S&P 500 and Nasdaq open higher while Dow lags

The S&P 500 and Nasdaq Composite traded around 0.2% and 0.4% higher, respectively, shortly after Friday's opening bell. The Dow lagged, trading marginally below flat.

All three indexes remained on track for weekly losses as of Friday's open.

— Alex Harring

AstraZeneca nudges higher after positive drug trial

Shares of British pharmaceutical company AstraZeneca were up 2.5% by mid-afternoon its drug Dato-DXd produced positive results in a trial for treating a common type of breast cancer.

Afternoon biggest movers: Wise up 5%, ING Group down 5%

British-Estonian fintech company Wise saw its shares climb 5% by early afternoon in London to lead the Stoxx 600.

At the bottom of the index, Dutch bank ING Group fell 5%.

- Elliot Smith

European stocks pare losses

The pan-European Stoxx 600 index was down 0.1% by late morning, having pared earlier losses of around 0.4%. Construction and material stocks dropped 0.9% while mining stocks added 0.9%.

HCOB euro zone PMIs remain in contraction territory

Fears of a euro zone recession were compounded on Friday as HCOB's flash composite purchasing managers' index (PMI) for September came in at 47.1, up from August's 33-month low of 46.7 but below the 50 mark separating expansion from contraction.

Biggest movers: Prosus up 4%, ABN Amro down 3%

There was little by way of major individual share price movement on Friday. Dutch investment group Prosus climbed 4% to lead the Stoxx 600 while at the bottom of the index, Dutch bank ABN Amro slipped 3%.

- Elliot Smith

UK retail sales rise 0.4% in August

U.K. retail sales rose 0.4% in August, the Office for National Statistics said Friday, partially recovering from a fall of 1.1% in July.

Food stores sales volumes increased by 1.2% after a fall of 2.6% in July, which was hampered by wet weather, while non-food stores sales rose by 0.6% after July's 1.2% fall.

"Whilst food grew 1.2% in volumes as inflation slows, the cost of living is still having an impact with volumes remaining depressed versus pre-pandemic with sales 4.1% below February 2020," noted Samantha Phillips, partner at McKinsey & Co.

The figures were largely in line with expectations, which will please the Bank of England after its decision to hold interest rates on Thursday, according to Neil Birrell, chief investment officer at Premier Miton investors.

"With inflation coming in below expectations earlier in the week, strong consumer spending would not have been welcome," Birrell said in an email.

"The UK economy appears to in reasonable shape given everything that is being thrown at it and sharp eyes will remain on the data as we monitor the impact of all the interest rate increases we have seen."

- Elliot Smith

Slightly lower open for Europe

The pan-European Stoxx 600 index slipped 0.2% in early trade, with construction and material stocks shedding 0.7% to lead losses as most sectors and major bourses slid into the red. Oil and gas stocks nudged 0.3% higher.

Here are the opening calls

Britain's FTSE 100 is seen around 7 points lower at 7,672, Germany's DAX is set to drop by around 55 points to 15,517 and France's CAC 40 is expected to shed around 32 points to 7,182, according to IG data.

CNBC Pro: Morgan Stanley says these 6 global stocks will benefit from a 'monumental shift' in the chip industry

A "monumental shift" is underway in the semiconductor industry — and a raft of stocks are set to benefit, according to analysts at Morgan Stanley.

In a Sept. 18 note, they highlighted a transition to "3D 'gate-all-around' architecture," which they said presents a more than $10 billion "cumulative" opportunity for semi-cap original equipment manufacturers by 2030.

The bank named the stocks it likes.

CNBC Pro subscribers can read more here.

— Amala Balakrishner

CNBC Pro: Looking for value stocks? Citi lists over 10 European names — for risk-takers and the cautious

European value stocks are doing better than growth stocks right now, according to Citi analysts.

"We believe European Value still has more to run with its undemanding valuations and upside to a China recovery but investors should remain cautious and consider Quality Value. For those investors [who are] less risk averse, consider Risky Value," the analysts wrote.

They screened for stocks in the two categories.

CNBC Pro subscribers can read more here.

— Amala Balakrishner