European Stocks Plummet as Inflation and Rate Fears Mount

European stocks closed the week in the red on Friday, despite a late-session rebound led by Volkswagen. The Stoxx 600 benchmark index rose 0.1 percent to settle at 649.88 points, but this modest gain was not enough to erase a weekly decline of 0.8 percent.

The pan-European index had traded lower for much of the day before corporate headlines and easing oil prices helped it recover into the close. The US non-farm payrolls report released on Friday signaled continued stability in the American labor market, reinforcing expectations that the Federal Reserve could raise interest rates later this month.

Volkswagen surged 5.9 percent to a two-month high after its supervisory board struck a turnaround agreement with unions and shareholder Lower Saxony. The automaker has been under pressure from US import tariffs, a stagnant European market, and aggressive Chinese rivals.

However, analysts were cautious about the company's prospects for sustained share price recovery. 'It definitely is a move in the right direction but it's going to take more than just this announcement,' said Fiona Cincotta, senior market analyst at City Index.