Volkswagen Rally Fails to Stem Weekly Losses in European Stocks

European shares ended the week lower despite a rally in Volkswagen after the automaker agreed on a major turnaround plan. The STOXX 600 index ticked up 0.1% to finish at 649.88 points, capping a volatile week with an overall decline of 0.8%. The weekly slide was fueled by escalating conflict in the Middle East, which sent crude prices higher and added to investor concerns over sticky inflation, rising government debt, and prolonged central bank tightening.

A resilient U.S. non-farm payrolls report also shaped Friday's sentiment, signaling ongoing stability in the U.S. labor market and reinforcing expectations that the Federal Reserve could raise interest rates later this month. Investors are now turning their attention to next week's U.S. consumer inflation print for a clearer signal on the Fed's trajectory.

Volkswagen jumped 5.9% to hit a two-month high, topping Germany's DAX index after the supervisory board of Europe's largest automaker struck a turnaround agreement that averted an escalation with unions and shareholder Lower Saxony. The automaker faces pressure from U.S. import tariffs, a stagnant European market as well as aggressive Chinese rivals that have all hurt its margin and hammered the stock.