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May 24 (Reuters) - European stocks lost ground on

Friday, set for their biggest percentage drop in more than five

weeks, as signs of persistent U.S. price pressures and a

recovering euro zone economy dashed hopes of interest rate cuts

from major central banks this year.

The pan-European STOXX 600 index was down 0.7%, as

of 0710 GMT.

U.S. stocks closed sharply lower on Thursday as an initial

euphoria following upbeat outlook from chip giant Nvidia ( NVDA )

faded after economic data showed inflation was still a

concern, potentially delaying any Federal Reserve rate cuts.

The German two-year bond yield hit its highest in six months

on Thursday after a survey showed euro zone business activity

has expanded at its fastest pace in a year this month. It traded

just below those levels on Friday.

Europe's rate-sensitive technology shares took the

biggest hit, down 1.4%, followed by utilities and banks

.

Shares of Renault rose 2.4% after the French

carmaker announced a share buyback plan and UBS upgraded the

stock to "neutral" from "sell".

Britain's National Grid rebounded nearly 8% after

Thursday's more than 10% plunge when it announced plans to raise

about 7 billion pounds ($8.9 billion).