European stocks are heading for a sharp weekly loss due to Middle East tensions

European stocks fell on Friday and were on track for their biggest weekly loss in three months, as growing concerns about a broader conflict in the Middle East, rising government bond yields and disappointing corporate earnings reports pushed investors off risk.

By 7:06 GMT, the European STOXX 600 index fell 0.9 percent to its lowest levels in seven months, tracking Wall Street indices, which closed lower overnight.

The index fell three percent during the week, and the turmoil in the Middle East may increase risk aversion, a trend driven by expectations that interest rates will remain high for a long period.

L’Oreal announced a rapid rise in third-quarter sales, supported by growth in Europe, but its results did not meet expectations of a strong recovery in China. The French cosmetics company’s shares fell about three percent.

Shares of Swedish garden equipment manufacturer Husqvarna fell 6.6 percent after third-quarter revenues fell short of expectations.

The decline in the two stocks led to a decline in the European household goods index by 1.2 percent, while interest rate-sensitive technology stocks topped the losses on the index, falling by 1.5 percent.

On the other hand, Sika shares rose 2 percent after the chemical company announced a 5.6 percent increase in sales for the first nine months of 2023.