European Shares Dip Amid Election Jitters and Bank Losses

European shares declined on Friday due to losses in banks and energy stocks. Investors remain cautious ahead of the second round of French parliamentary elections, worrying about fiscal sustainability and political outcomes. Despite the day's losses, the STOXX 600 index reported a 1% weekly gain.

European shares experienced a downturn on Friday, driven by losses in banking and energy stocks. The decline comes as investors adopt a cautious stance ahead of the second round of French parliamentary elections, with fears over fiscal sustainability and potential political instability.

The pan-European STOXX 600 index fell by 0.2%, although it achieved a 1% gain for the week. French financial markets have been under pressure since President Emmanuel Macron called for a snap election last month. Concerns are mounting over the far-right National Rally (RN) party's lead, which could disrupt fiscal stability, as well as the uncertainty of a clear winner in the upcoming vote.

Market analysts note that the lack of clear political control could lead to only essential matters being addressed, inflating investor nervousness. Meanwhile, French stocks dropped 0.3% on Friday but enjoyed their most significant weekly gain since early May. Banking and energy stocks were notably impacted, dropping 0.9% and nearly 1%, respectively. In the UK, the FTSE 250 rose by 0.9%, hitting a monthly high following a Labour Party victory, while the blue-chip FTSE 100 fell by 0.4%. U.S. job growth data suggests moderated inflation, raising chances of a Fed rate cut by September.

(Disclaimer: With inputs from agencies.)