Khaberni - European stocks declined for the third straight week, marking their longest losing streak in almost a year, after an escalation of the conflict in the Middle East heightened concerns about inflation and interest rate hike expectations.
According to Reuters, the European Stoxx 600 index closed down 1.8% at 573.28 points on Friday, posting a weekly decline of 3.8%.
The initially quiet week quickly turned into a new wave of inflation fears after strikes targeting energy infrastructure facilities in the Middle East led to rising oil prices.
The European Central Bank kept interest rates unchanged on Thursday, but policymakers are expected to discuss raising rates in the coming months.
Francesca Palmas, Chief European Economist at Capital Economics, said: "We believe policymakers may indeed start raising interest rates as early as April, considering that some have raised this possibility."
Data from the London Stock Exchange group indicates that traders currently expect a 25 basis point interest rate hike twice by the end of the year, a radical change compared to pre-war expectations that prices would remain unchanged throughout the year.
All major sub-indexes closed lower, with defense stocks down 3.2% and utilities down 2.7%, while financial sector and energy sector stocks each declined by 2%.
Three US officials told "Reuters" that the US military has begun deploying thousands more Marines and sailors in the Middle East.
Israel launched new attacks on Iran a day after US President Donald Trump urged Israel not to repeat its strikes on Iran's natural gas infrastructure.
Europe's heavy reliance on Middle Eastern oil has exposed it to fluctuations in crude oil prices as the closure of the Strait of Hormuz continues, through which a fifth of global oil supplies pass.
In corporate news, Unilever's stock rose by 0.5% in a volatile session after the consumer goods group confirmed it is in talks with McCormick & Company, based in the United States, to sell its food units.
Infineon's stock also rose 1.5% after J.P. Morgan upgraded the stock rating for the German semiconductor manufacturer.
