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Euro STOXX volatility index hit highest level since Nov

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German, French, Italian, Spanish benchmark stock indexes

slide

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Euro zone Feb retail sales fall 0.7%

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STOXX 600 off 0.9%

(Updates with closing prices)

By Johann M Cherian, Ozan Ergenay and Ankika Biswas

April 5 (Reuters) - An overall market decline dragged

Europe's benchmark stock index to a more than two-week low on

Friday, following hawkish comments from some Federal Reserve

officials, a spike in Middle East tensions and

hotter-than-expected U.S. jobs data.

The continent-wide STOXX 600 fell 0.9%, logging its

worst day since early February. For the week, the index dropped

1.2%, its worst weekly drop since mid-January.

Utilities, retail and telecommunications

were the worst-hit sectors, down between 1.6% and 2.2%.

Benchmark indexes across all major European economies such

as Germany, France, Italy and Spain

fell over 1% each.

Fresh data showed much higher-than-expected U.S. nonfarm

payrolls for March, potentially delaying anticipated Federal

Reserve rate cuts this year. The central bank's policymakers

also struck a hawkish chord before and after the data.

"The U.S. employment strength shouldn't move the needle too

much for the ECB," said Steve Sosnick, chief strategist at

Interactive Brokers.

"In Europe there are a few more stresses on a lot of the

economies, so the situation there might prove a little more

fertile for rate cuts."

Optimism around a rate reduction by the European Central

Bank and the Fed has been the primary driver for gains in equity

markets globally since late 2023.

Also exerting pressure on equities were rising euro zone

bond yields after the U.S. jobs data.

Reflecting investor anxiety, the euro STOXX volatility index

hit its highest since November 2023.

European equities were already under pressure since early

trade following hawkish comments from Fed officials and a spike

in Middle East tensions.

Back home, data showed euro zone retail sales dropped 0.7%

on an annual basis, less than the 1.3% decline expected by

economists polled by Reuters.

Shares of SoftwareOne dropped 1% after it announced

all proxy advisers were now against the complete replacement of

the Swiss firm's board of directors.

Holcim lost 0.5% after the Swiss building materials

company said it will buy Tensolite, which makes and distributes

pre-cast concrete systems in South America.

Bureau Veritas shed 0.7% after French investment

firm Wendel said it sold 9% of shares in the business

support company.

Shell said it expected significantly lower results

from its liquefied natural gas trading business in the first

quarter of 2024 from the previous three months. However, its

shares rose 0.6% due to higher oil prices.