European stocks end week lower as rate worries resurface
Refiles to add dropped word in headline
STOXX 600 logs weekly decline of 0.4%
Spain's Acciona warns on earnings outlook, shares fall
Renault climbs after buyback, UBS upgrade
By Sruthi Shankar and Johann M Cherian
May 24 (Reuters) -European stocks ended lower on Friday and down for the week, as signs of persistent U.S. price pressures and a recovering euro zone economy cast doubt over prospects for several interest rate cuts from major central banks this year.
The pan-European STOXX 600 index .STOXX dipped 0.1%, marking a weekly loss of nearly 0.4%, its biggest in three weeks.
Rate cuts bring cheaper financing for companies and consumers, which can translate into more business and profits.
Investors, however, grew more cautious after European policymakers warned about monetary easing beyond June, keen to avoid a flare up in price pressures, especially if the Fed continues to delay its easing cycle.
Traders are currently pricing in 55 bps of cuts from the European Central Bank, down from 67 bps a week ago.
Eurozone bond yields recorded their biggest weekly rise in a month, after a survey showed euro zone business activity expanded at its fastest pace in a year in May, while separate data confirmed that Germany's economy expanded in the first quarter of 2024. GVD/EUR
"With the pickup in growth momentum and inflation still declining, the (central bank) is in a favourable position to wait for the data in the coming months before making firm commitments on the policy rate path," Danske Bank analysts said in a note.
Defensive stocks less sensitive to economic cycles, such as utilities .SX6P, healthcare .SXDP and food and beverage stocks .SX3P were among the hardest hit, while cyclicals, such as insurance .SXIP and the auto sector .SXAP were among top performers.
Among single stocks, Acciona ANA.MC slid 7.1% after the Spanish construction and energy conglomerate lowered its forecast for core earnings growth this year based on current forecast energy prices.
Renault RENA.PA rose 5.2% and was among top performers on the main index after the French carmaker announced a share buyback plan and UBS upgraded the stock to "neutral" from "sell".
Equinor EQNR.OL said it and its partners in the North Sea Troll gas field, Europe's largest, will invest $1.13 billion to further boost production, sending shares of the Norwegian energy company down by 2.7%.
Abrdn ABDN.L rose 1.6% after the UK fund manager said CEO Stephen Bird has stepped down, following a turbulent four-year tenure marked by deep outflows of client cash and a much-criticised re-branding.
Reporting by Sruthi Shankar and Johann M Cherian in Bengaluru; Editing by Sherry Jacob-Phillips, Mrigank Dhaniwala and Tomasz Janowski
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