European equity markets posted modest gains on Friday, consolidating after a generally upbeat week, as investors digested fresh economic data from the region while monitoring oil price movements and developments in Spain’s banking sector.

European Indices Extend Gains

By 03:05 ET (07:05 GMT), the DAX index in Germany rose 0.3%, the CAC 40 in France added 0.1%, and the FTSE 100 in the U.K. gained 0.2%. All three benchmarks remained on track to finish the week higher, with France’s CAC 40 up nearly 2% despite political turmoil, showing resilience after recent volatility.

U.K. Growth Stalls; German Inflation Rises

Economic data signaled headwinds for Britain’s recovery. The U.K. economy showed no growth in July, compared with a 0.4% expansion in June, highlighting a summer slowdown after a relatively solid first half of 2025.

Meanwhile, German inflation accelerated to 2.1% in August, up from 1.8% in July, confirming preliminary data. Comparable figures from France and Spain are expected to reinforce the view that eurozone inflation remains largely contained.

The European Central Bank on Thursday left interest rates unchanged at 2%, projecting stable growth and inflation. Policymakers signaled little urgency to adjust borrowing costs further, though markets continue to speculate about easing risks next year.

U.S. Inflation Data in Focus

Across the Atlantic, Thursday’s U.S. consumer price index (CPI) data showed inflation climbing 2.9% year-on-year in August, broadly in line with expectations. The figures bolstered market bets that the Federal Reserve will cut rates by 25 basis points at its September 16-17 meeting, potentially restarting its easing cycle.

Spain’s Banking Clash: Sabadell Rejects Bid

In corporate Europe, Banco Sabadell’s board unanimously rejected a takeover offer from BBVA, arguing the proposal undervalued the lender and overstated cost savings. The move sets up a prolonged standoff between two of Spain’s largest banks, with regulators also expected to scrutinize the deal.

Oil Slides on Demand Worries

Crude prices fell further on Friday, deepening losses from the prior session. By 03:05 ET, Brent futures slipped 0.7% to $65.88, while WTI futures dropped 0.8% to $61.85.

The decline followed U.S. government data showing a surprise build of 3.9 million barrels in crude inventories, raising concerns of weakening demand in the world’s largest consumer.

Supply-side dynamics also weighed, with the International Energy Agency projecting faster-than-expected growth in global output this year, driven by OPEC+ supply increases.