European stocks edged higher on Friday but remained on course for their sharpest weekly fall since April, as rising bond yields and expectations of further interest-rate increases weighed on sentiment.
The pan-European STOXX 600 was up 0.3% at 637.60 points by 7.16am GMT, having closed at a two-month low the previous day. The index was still set for a steep weekly decline after the European Central Bank raised borrowing costs and warned that inflation would remain elevated.
The ECB increased its three key interest rates by 0.25 percentage points on Thursday, citing continuing inflationary pressure from the conflict in the Middle East. Its latest projections put headline eurozone inflation at 3% for 2026, 2.5% for 2027 and 2.1% for 2028. ([ecb.europa.eu](https://www.ecb.europa.eu/press/press_conference/monetary-policy-statement/2026/html/ecb.is260910~6a45359cfc.ga.html?utm_source=openai))
Oil prices remained above $100 a barrel for a third consecutive day, adding to concerns about the outlook for consumer prices. Government bond yields also stayed high, with the US 10-year Treasury yield just below 5% and Germany’s 10-year borrowing cost close to a multi-decade peak.
Investors were awaiting the release of US consumer price figures for August, due at 1.30pm UK time. The Bureau of Labor Statistics scheduled the data for 8.30am Eastern time, with markets looking for clues about the Federal Reserve’s next move ahead of its policy meeting next week. ([bls.gov](https://www.bls.gov/schedule/news_release/cpi.htm?utm_source=openai))
Among individual companies, Italian semiconductor testing group Technoprobe rose 4.7% after Taiwan Semiconductor Manufacturing Company reported strong revenue for August.
