European Shares Tumble on Inflation and Tariff Concerns: A European Market Review

European shares dropped due to inflation concerns spurred by U.S. data and new tariffs announced by President Trump. The STOXX 600 index fell 0.7%, its worst week since December. The market reacted to strong U.S. core PCE data and was impacted by Germany's economic challenges and upcoming ECB decisions.

In Friday's trading, European shares saw a decline as mounting concerns over inflation, highlighted by recent U.S. data, discouraged investors from engaging with risky assets. The pan-European STOXX 600 index fell 0.7% for the day, marking a 1.4% decline for the week, the steepest drop since mid-December.

The core U.S. Personal Consumption Expenditures index, a crucial metric for the Federal Reserve, increased at a monthly rate of 0.4%, fueling market unease. Daniela Hathorn of Capital.com noted that this data intensified risk aversion, hitting U.S. stocks hard and influencing the European market. President Trump's 25% tariffs on vehicle imports further compounded market jitters.

Despite recent setbacks, the STOXX 600 could see its best quarterly gain in years thanks to German spending initiatives and capital rotation from U.S. stocks. Meanwhile, German unemployment rose, and European yields dropped in anticipation of ECB rate cuts. In corporate news, Deutsche Bank and Ubisoft faced their own hurdles, impacting their stock performance.

(With inputs from agencies.)