Europe close: Stocks end strong week in the red

(Sharecast News) - European markets edged lower on Friday as investors paused after a week of record highs, with sentiment tempered by lingering geopolitical tensions and a rotation away from recent technology-driven gains. The pan-European Stoxx 600 slipped 0.12% to 613.82, having closed at an all-time high on Thursday after chip stocks rallied on the back of strong results from Taiwanese semiconductor group TSMC.

As AJ Bell's Dan Coatsworth noted, "investors have been kept on their toes year-to-date with non-stop geopolitical issues, and mixed messages from the business world," adding that a quieter end to the week "gave investors a chance to catch their breath and take stock of events."

National markets were broadly weaker - Germany's DAX fell 0.3% to 25,276.28, France's CAC 40 dropped 0.65% to 8,258.94 and the UK's FTSE 100 eased 0.04% to 10,235.29.

Coatsworth said "European indices quietened down, with small losses in the UK, France, Spain, and Germany," while futures suggested "a positive but unspectacular day on Wall Street."

Geopolitical risk receded modestly after tensions between Iran and the US appeared to ease, as threats of executions for arrested anti-regime protestors were dialled back and pressure from Gulf allies reportedly tempered US president Donald Trump's earlier warnings of "very strong action."

German inflation slows sharply, US industrial production rises

Economic data provided a mixed backdrop.

German inflation slowed sharply in December to a 15-month low, with the consumer price index rising 1.8% year on year, down from 2.3% in November, according to Destatis.

The reading was the lowest since September 2024 and fell below the European Central Bank's 2% target for the first time this year, as energy prices declined 1.3% annually and food inflation eased to 0.8%.

Core inflation also cooled to 2.4%, its lowest level since June 2021.

In the US, industrial production rose 0.4% in December for a second straight month, beating forecasts and lifting capacity utilisation to 76.3%, the highest since July, though still below its long-term average.

Patrick Munnelly at TickMill said broader risk sentiment had recently been "revitalised as markets advanced, alleviating concerns over inflated tech valuations," with investors increasingly confident in the durability of the tech-led rally.

Novo Nordisk jumps, Porsche in the red

In equities, Novo Nordisk jumped 6.49% after the UK's Medicines and Healthcare products Regulatory Agency approved higher doses of its Wegovy weight-loss treatment, allowing weekly dosing of up to 7.2 milligrams for eligible patients.

The stock was also in focus ahead of forthcoming US prescription data.

Berenberg reiterated its buy rating, arguing that stronger-than-expected uptake of the newly-launched oral Wegovy pill could offset pricing and patent headwinds in 2026.

Defence stocks outperformed after European troops arrived in Greenland amid renewed rhetoric from Trump over annexation of the Danish territory.

Kongsberg Gruppen surged 9.05%, while BAE Systems gained 1.47%, Thales rose 2.55% and QinetiQ added 2.28%, after a White House meeting ending without agreement on the island's future.

Coatsworth said defence stocks, alongside gold miners, have been "winning trades year-to-date," as investors seek reassurance "given a backdrop of uncertainty and geopolitical tensions."

On the downside, Porsche slipped 1.08% after reporting a 10% drop in vehicle deliveries in 2025, citing supply constraints and weaker demand in China.

The company reiterated its "value over volume" strategy, with management pointing to declines in Macan and Cayenne sales and a sharp fall in Taycan deliveries amid slower adoption of electric vehicles.

Mining stocks also retreated as copper prices fell on reports that Chinese regulators ordered exchanges to remove high-frequency trading servers from data centres.

Rio Tinto lost 1.87%, Antofagasta dropped 2.08%, Anglo American slid 2.41% and Glencore fell 2.53%, weighing on the broader resources sector.

Reporting by Josh White for Sharecast.com.