Commodity producers dragged down European equities as Mario Draghi indicated the region's economy still needs stimulus.
The Stoxx Europe 600 Index fell 0.6 per cent, trimming its weekly gain to 0.6 per cent. The European Central Bank president said the recovery isn't strong enough yet and the current level of monetary support is key. Miners declined with metals, while bond proxies such as utilities and telecom companies dropped as global bonds headed for their biggest two-week slide in at least 26 years.
"The European recovery is clearly still on monetary life support," said Michael Ingram, a market strategist at BGC Partners in London. "Today is one of these days when the European equity market realises that it has been almost entirely supported by multiple expansion as earnings growth is not firmly entrenched. The European political outlook is becoming more opaque by the day."
While European equities climbed for a second week, the market has been hit by large intraday swings. The Stoxx 600 has alternated between gains and losses during market sessions for nine straight days, its longest streak in two years. After the initial rally that followed Donald Trump's presidential win, the gauge has failed to keep its momentum. With a valuation of about 14 times estimated earnings, it trades near its lowest level since June relative to the MSCI All-Country World Index.
Equity ETFs received record inflows in the week ended November 16, with $US800 million going into European funds, a Bank of America report showed. Those tracking the financial industry got the most money ever, while bond funds saw their biggest withdrawals in 3 1/2 years.
"This is just the last day of a week of consolidation after the recent Trump rally," said Herbert Perus, head of equities at Raiffeisen Capital Management in Vienna. His firm manages €30 billion. "We think the positives for the market are intact, we will soon head into a year-end rally."
Drops in Italian and Spanish lenders dragged down the FTSE MIB Index and IBEX 35 Index more than 1 per cent, some of the biggest declines among western-European markets. France's CAC 40 Index lost 0.5 per cent, while Germany's DAX Index slid 0.2 per cent and Britain's FTSE 100 Index declined 0.3 per cent.
Among stocks moving on corporate news, LafargeHolcim dropped 1.9 per cent after cutting its earnings and cash flow targets for 2018. Rolls-Royce Holdings slid 5.9 per cent after Emirates said it's unhappy with performance shortfalls afflicting its engines. Bekaert sank 9.4 per cent after saying market uncertainty in Europe will continue.