By Peter Nurse 

- European stock markets weakened Friday on concerns of slowing economic growth as the banking crisis drifts on.

At 05:00 ET (09:00 GMT), the in Germany traded 1.3% lower, the in France dropped 1.3% and the in the U.K. fell 1.4%.

Economic data released Friday confirmed that the important and manufacturing sectors remained firmly in contraction territory in March, even though showed signs of improvement.

U.K. unexpectedly rebounded by 1.2% in February from the month before, returning sales volumes to their pre-pandemic level.

That said, it’s difficult to see this improvement continuing as Europe weighs up the fallout from the forced UBS-Credit Suisse tie-up, with the banking crisis prompting fears that lending will slow, weighing on economic activity.

Strains are also showing in the U.S. banking sector as borrowing at the Federal Reserve’s discount window was a hefty $110.2 billion as of Wednesday. 

Additionally, lending from the Fed's new Bank Term Funding Program ballooned to $53.7B, while loans to foreign central banks surged to $60B.

At the same time, central banks are continuing their clamp down on inflation, with the , the and the hiking rates this week, following last week’s increase.  

Citigroup cut its target for the index, expecting the benchmark to end the year at 445 points — around its current level —  down from a 475-point forecast issued just last month.

“Volatility in the global banking sector should shift investors’ attention to recession risks and deteriorating fundamentals,” said Citi, in a note, expecting company earnings to contract 5% to 10% this year.

In corporate news, (ETR:) stock fell over 8% after a sharp jump in the cost of insuring against the risk of default, while UBS (SIX:) stock fell over 6% in the aftermath of its acquisition of troubled rival Credit Suisse.

Tui (ETR:) stock fell over 6% after the German-based tour operator launched a steeply discounted rights issue to help it repay pandemic-era government aid.

J D (LON:) stock rose over 7% after the U.K. pub group swung to a profit and posted higher-than-anticipated sales in its first half.

Oil prices fell Friday, ending a largely positive week on the retreat after U.S. officials expressed caution over the length of time it would take to refill the country’s Strategic Petroleum Reserve, which has fallen to a near 50-year low.

U.S. Energy Secretary Jennifer Granholm said on Thursday that it will be “difficult” to refill government oil reserves this year, undermining previous indications that the Biden administration will begin restocking if prices traded around $67 to $72 a barrel.

By 05:00 ET, futures traded 1.2% lower at $69.10 a barrel, while the contract climbed 1.1% to $75.05. 

Both crude benchmarks are still on track for a weekly gain of about 3%-4%, recovering from their biggest weekly declines in months last week as the banking sector exacerbated worries about a possible recession.

Additionally, fell 0.4% to $1,988.95/oz, while traded 0.4% lower to 1.0784.