(Bloomberg) — European stocks sank Friday, wrapping up their worst week in 18 months, as a highly anticipated US job report showed a mixed outlook for economic growth.

The Stoxx Europe 600 Index dropped 1.1% by the close, after switching between loss and gain during the session. The index slumped 3.5% for the week — its biggest decline since the regional banking crisis roiled markets in March 2023.

The US data showed hiring remained tepid in August even as the unemployment rate edged down, a development likely to fuel ongoing debate over how big an interest-rate cut the Federal Reserve should undertake.

“The number that shook markets a month ago has disappointed again, and weaker than expected jobs data and downward revisions to previous months don’t help either,” said Neil Birrell, Chief Investment Officer at Premier Miton Investors.

Traders are now pricing in more than 100 basis points worth of rate cuts from the Fed by the end of 2024, according to swaps data. Just after the jobs report, New York Fed President John Williams said it’s now appropriate for the central bank to reduce rates, though he didn’t comment on the potential size of a cut at the Fed’s Sept. 17-18 meeting. 

Other market participants were more optimistic following the data.

“My take is that these figures vindicate the scenario of a slowdown and that we are not heading towards a recession in the short term,” said Jeanne Asseraf-Bitton, head of research and strategy at BFT IM in Paris. “This should allow the Fed to limit its rate cut to 25 basis points.”

Tech and mining stocks fell the most Friday, while real estate and utilities outperformed. Raiffeisen Bank International AG slid after a court in Russia ordered shares of the company’s unit there to be frozen, further complicating efforts to sell it and deepening the fallout from an abandoned plan to bring capital out of the country.

Europe’s benchmark index has stumbled after hitting a record high last week as subdued economic data globally dented sentiment. 

“People are nervous, and that could add to short-term volatility,” said Frederique Carrier, head of investment strategy at RBC Wealth Management. 

About $600 million was redeemed from European equity funds in the week through Sept. 4, while US stocks suffered the first outflow in 10 weeks at $20 million, according to a note from Bank of America Corp., citing EPFR Global. 

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–With assistance from Michael Msika.

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