SAP Fuels European Shares Rebound Amid Higher Oil Prices and Inflation Risks

European shares rebounded on Friday after suffering their steepest one-day loss in two weeks, as investors took comfort from some corporate earnings and weighed the impact of higher oil prices on monetary policy.

The pan-European STOXX 600 index rose by 0.6% to 644.67, marking its second straight week of gains. Germany's DAX also gained, driven by SAP's 10% surge after the software group reported stronger-than-expected cloud backlog growth in the second quarter.

The technology sector added 1.7%, recouping some lost ground following disappointing updates from STMicroelectronics and BE Semiconductor earlier this week.

However, Deutsche Bank analysts led by Jim Reid cautioned that big tech companies face challenges from stretched valuations and returns on investment in the sector.