European stocks post first weekly loss in five weeks on oil surge

European stocks ended the week with their first weekly decline in five weeks as a surge in oil prices and mixed economic data weighed on sentiment.

The pan-European STOXX 600 index fell 0.4% for the week, snapping a four-week winning streak, while the region’s benchmark equity gauges tracked declines in major European markets. Brent crude futures rose more than 3% to near $85 per barrel, driven by escalating geopolitical tensions in the Middle East, which heightened concerns over supply disruptions.

Data released during the week painted a mixed picture of the eurozone’s economic outlook. Eurozone inflation remained sticky at 2.6% year-on-year in February, defying expectations of a slight easing, while retail sales unexpectedly contracted by 0.3% month-on-month in January. Germany’s industrial production also underperformed, declining 0.2% in January, underscoring persistent weakness in Europe’s largest economy.

The energy sector led losses among STOXX 600 components, with oil and gas stocks falling 2.1% as crude prices surged. Financials and consumer staples were among the few sectors to post gains, supported by steady bond yields and resilient consumer demand.

Analysts attributed the weekly decline to a combination of external pressures, including higher energy costs and cautious economic signals, which offset optimism around corporate earnings and potential policy easing from the European Central Bank. The ECB has signaled a cautious approach to rate cuts, citing lingering inflation risks despite recent progress.

The weekly loss marked a shift in investor sentiment, which had been buoyed by expectations of monetary policy easing and improving economic conditions in recent weeks. Traders will now focus on upcoming data releases, including eurozone GDP figures for the fourth quarter and February’s unemployment rate, for further direction.