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European lenders sink after Wall St rout
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Italy's Leonardo top gainer on STOXX 600
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SAP slips after rival Oracle's revenue miss
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Fed seen on lower rate path as wage gains cool
March 10 (Reuters) - European shares slid to a seven-week low on Friday as financial stocks led a broader market rout after a warning from a U.S. bank triggered worries over the sector's balance sheet resilience in the face of rising interest rates.
The pan-European STOXX 600 index closed the day 1.4% lower and the week down 2.3%, its steepest weekly fall so far this year.
Banks fell 3.8%, the biggest one-day fall in nine months, as HSBC, Deutsche Bank, Barclays , Unicredit and Commerzbank dropped between 2.6% and 7.4%.
Credit Suisse's shares hit a new record low and the financial services index dropped 2.8%.
The sell-off was sparked by U.S. tech specialist Silicon Valley Bank's failed scramble for fresh capital, after losing $1.8 billion selling a package of bonds to meet depositor demands for cash.
"European banks are groaning under the weight of worry about how much value their large bond holdings will have dropped by," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
"Maybe they'll start to stabilise over the next few sessions, unless another contagion takes place."
There was some brief comfort from data signalling a cooling U.S. labour market after Federal Reserve Chair Jerome Powell's hawkish remarks earlier this week.
Focus will shift to the European Central Bank next week, which is expected to hike its key lending rate by 50 bps.
The ECB's terminal interest rate will be much higher than thought earlier, a Reuters poll showed, as stubbornly high inflation pushes policymakers to be more aggressive.
Analysts at TD Securities expect the ECB to drop its forward guidance and projections to show lower headline inflation and stronger core inflation and growth.
Among other notable movers on Friday, ASML Holding NV fell 1.3% on uncertainty over the Dutch government's new restrictions on chip-technology exports to China.
Software maker SAP eased 0.9% after U.S. rival Oracle Corp narrowly missed quarterly revenue estimates.
Retailer Casino slid 5.6% on a decline in fourth-quarter sales and profit, and Daimler Truck slumped 4.5% on a results miss despite a positive outlook.
Italy's defence and aerospace group Leonardo jumped 2.9%, the best performer on the STOXX 600, on its full-year orders and 2023 guidance beat.
Of the 238 STOXX 600 companies that have reported fourth-quarter earnings to date, more than half have topped estimates, Refinitiv data showed on Tuesday.
German consumer prices rose by an annual 9.3% in February, confirming preliminary data, while Spanish retail sales rose 5.5% in January, topping last month's growth.
Germany's DAX fell 1.3% and Spain's IBEX was down 1.5%. (Reporting by Susan Mathew, Medha Singh and Ankika Biswas in Bengaluru; Editing by Subhranshu Sahu and Dhanya Ann Thoppil, Kirsten Donovan)
