17th Oct 2025 12:20
(Alliance News) - European stocks sank on Friday, with risk appetite fading toward the week's end and the FTSE 100 dragged lower by widespread declines.
Losses spanned sectors from pharmaceuticals to oil majors as developments in the US unnerved investors, though Pearson offered a rare bright spot, rising 5.2% after the educational publisher reported higher third-quarter sales.
The FTSE 100 index slumped 121.53 points, 1.3%, at 9,314.56. The FTSE 250 dropped 342.18 points lower, 1.6%, at 21,649.19 while the AIM All-Share gave back 14.67 points, 1.9%, to 775.22.
The Cboe UK 100 was down 1.3% at 931.10, the Cboe UK 250 shed 1.8% at 18,876.62 while the Cboe Small Companies fell 1.1% at 17,527.04.
In European equities on Friday, the CAC 40 in Paris was down 0.7%, while the DAX 40 in Frankfurt was down 2.1%.
In London, losses were particularly acute among banks amid renewed concerns about the health of US regional lenders. Barclays dropped 5.9%, NatWest 3.0%, Lloyds 2.1%, and HSBC 2.0%.
Credit bubble fears foiled investor sentiment.
Kathleen Brooks, research director at XTB, said: "Fears are rising that the rush into credit over the past two years will lead to a wave of bad loans and write-downs, which could affect the banking sector, similar to what happened with Silicon Valley Bank in 2023.
"Combined with fears about a trade war between the US and China, risk is being taken off the table as we end the week."
Brooks added: "What started as concerns about two bankrupt companies, First Brands and Tricolor, and the impact on private lenders, has now broadened out to concerns about US regional banks after Zions Bancorp and Western Alliance both said that they would suffer losses due to fraudulent loans."
Russ Mould, investment director at AJ Bell, said the pullback in UK-listed banks appeared to be sentiment-driven.
"There is no evidence of any issues with the London-listed core banking names, but investors often have a knee-jerk reaction when problems appear anywhere in the sector," Mould commented.
Among European lenders, BNP Paribas fell 3.8%, UBS Group lost 3.4%, Deutsche Bank sank 6.9%, and Santander dropped 4.6%. BBVA was an outlier, rising 5.1% after its takeover offer for Banco de Sabadell failed to win sufficient shareholder support. BBVA also announced a buyback.
The Spanish National Securities Market Commission said the offer was accepted by 25.5% of Sabadell investors, falling short of the 30% minimum acceptance threshold. It added that BBVA will resume share buybacks following the failed bid. Sabadell shares fell 9.1%.
Trade tensions with China, which have simmered throughout the week, also adding to the unease. Beijing urged "equal dialogue" with Washington amid the escalating trade dispute between the two economic powerhouses.
Relations between the US and China have deteriorated in recent weeks after Beijing imposed sweeping restrictions on rare earth exports.
In response, US President Donald Trump announced 100% tariffs set to take effect on November 1, though an expected meeting with Chinese counterpart Xi Jinping could offer an opportunity to ease tensions.
Asia-focused lender Standard Chartered slipped 4.2%, while insurer Prudential, with similar regional exposure, fell 2.7%.
Data confirmed that inflation in the eurozone picked up in September, staying above the European Central Bank's target.
According to Eurostat, consumer prices in the single-currency area rose 2.2% annually, in line with earlier estimates and up from 2.0% in August. Month-on-month, inflation increased 0.1%, matching the previous pace.
Sterling traded at USD1.3437 midday Friday, up from USD1.3429 late Thursday afternoon. The euro perked up to USD1.1686 from USD1.1671. Against the yen, the dollar declined to JPY150.23 from JPY150.83.
Stocks in New York were called lower, with the Dow Jones Industrial Average seen down 0.7%, the S&P 500 down 1.0%, and the Nasdaq Composite down 1.2%.
The yield on the 10-year US Treasury narrowed to 3.99% on Friday afternoon, from 4.03% at the time of the London equities close on Thursday. The 30-year yield slimmed to 4.60% from 4.62%.
A barrel of Brent fell to USD60.97 early Friday afternoon from USD61.70 at the time of the London equities close on Thursday.
Gold traded at USD4,325.53 an ounce, up from USD4,270.73 late Thursday afternoon in London.
The precious metal briefly climbed above USD4,380 on Thursday, setting yet another record before easing slightly.
"It's no surprise that gold has rallied hard this year as investors are increasingly finding more things to worry about. Gold is the comfort blanket in times of stress, and it has risen again today following the banking sector woes," said AJ Bell's Mould.
Elsewhere in London, Ferrexpo jumped 11% on renewed hopes for peace in Ukraine. The Ukraine-focused iron ore pellet producer gained as investors responded to fresh diplomatic efforts to end the Russia-Ukraine conflict.
Ukrainian President Volodymyr Zelensky is set to meet US President Trump in Washington on Friday, seeking US-made Tomahawk missiles, even as Trump prepared for talks with Russian President Vladimir Putin in Budapest.
Still to come on Friday's economic calendar are US building permits and industrial production figures, though both are expected to be delayed due to the government shutdown.
By Eva Castanedo, Alliance News reporter
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