By Amruta Khandekar and Devik Jain
(Reuters) -Europe's STOXX 600 share index fell on Friday as concerns grew that major global central banks would retain their aggressive stance on inflation, with dismal earnings updates from a slew of companies including Adidas (OTC:ADDYY) adding to worries about a recession.
The region-wide STOXX 600 ended 0.6% lower, after closing higher on Thursday following the resignation of Liz Truss as British prime minister. Still the index logged a weekly gain of nearly 1.3%.
"The short term boost that we had this week is basically just that we've seen a heavy sell off over the last month or so. I don't believe we are at the point yet where people are feeling optimistic or see a turn around on the horizon," said Craig Erlam, senior market analyst, UK & EMEA, OANDA.
"There is a lot of uncertainty around where peak inflation is and where peak interest rates will be and until we start to get some clarity and certainty on that, the markets are going to remain under pressure."
With a background of tightening financial conditions, markets are parsing forecasts from companies to gauge the impact of macro pressures. U.S. social media company Snap Inc (NYSE:SNAP)'s fourth-quarter outlook sounded alarm bells about a hit to advertising revenue from rampant inflation.
Adidas dropped 9.5% as the German sporting goods maker cut its full-year outlook, citing weaker demand. Rival company Puma followed it down with a drop of 7.3%.
Shares of beauty giant L'Oreal dipped 5.8% after what analysts called the "debatable quality". of its quarterly sales beat.
French carmaker Renault (EPA:RENA) confirmed its full-year outlook and posted higher quarterly sales. Shares of the company inched up 0.1%, while other automakers fell.
Retail stocks fell 3.2% and led declines among the STOXX 600 sectoral indexes. Data showed British shoppers reined in their spending more sharply than expected in September.
"The outlook for consumers looks pretty bleak, particularly when they're having to cope with rising costs of living, energy prices," said Michael Hewson, chief markets analyst at CMC Markets.
Third-quarter earnings for STOXX 600 companies are expected to increase 28.4% from a year earlier, according to latest Refinitiv estimates.
French media company Vivendi (OTC:VIVHY) flagged a slowdownin its pay-TV unit Canal+, sending its shares down 2.9%.
Swedish telecom operator Telia and Norwegian sustainable technology company Tomra Systems slid 12.3% and 8.2% respectively as soaring costs pressured their results.
Huhtamaki gained 7.1% after the Finnish maker of packaging for food and beverages posted a quarterly earnings beat and booked a bigger than expected gain from the divestment of its Russian operations.