The slump in bonds and the advance in crude were the primary catalysts.
Brent crude had accumulated a 5.7% gain for the week, reaching 107 dollars per barrel, fueled by a lack of progress in reopening the Strait of Hormuz. Meanwhile, bond yields rose (in tandem with falling prices) amid fears of escalating inflation.
Iran claims that around 30 ships have managed to cross the passage, but traffic remains a fraction of pre-conflict volumes. Attacks on one vessel and the seizure of another stoked fears over energy supplies, while concerns intensified that the blockade could extend beyond June, potentially draining global reserves and worsening the energy crisis.
Overhanging these factors was Donald Trump's visit to Beijing, where the US president concluded two days of meetings with Chinese leader Xi Jinping at the Zhongnanhai compound.
Trump noted that China shared his position on Iran and wanted to see the Strait of Hormuz open, in addition to showing interest in purchasing US oil, although the president also conveyed some impatience regarding the lack of progress in reopening the passage.
The rise in crude was fueling inflationary risks in the United States, weighing on investor appetite for Treasury bonds.
A series of weak auctions throughout the week -- involving three-year and ten-year notes and thirty-year bonds -- highlighted the fragility of the sovereign debt market, where yields climbed to one-year highs.
In this context, the probability of a further rate hike by the Federal Reserve more than doubled during the week to 45%.
Added to this was the exhaustion of the stock market euphoria surrounding technology stocks linked to artificial intelligence. After months of sustained gains, the rally that had buoyed investors gave way to renewed inflationary fears.
At 0705 GMT on Friday, the Spanish benchmark IBEX 35 was down 153.40 points, or 0.86%, at 17,655.80 points, while the FTSE Eurofirst 300 index of leading European shares retreated 0.77%.
In the banking sector, Santander lost 1.31%, BBVA fell 1.34%, Caixabank shed 0.82%, Sabadell dropped 1.45%, Bankinter gave up 1.16%, and Unicaja Banco lost 1.52%.
Among large-cap non-financial stocks, Telefónica gained 0.20%, Inditex shed 0.59%, Iberdrola gave up 0.49%, Cellnex fell 0.63%, and the oil company Repsol rose 0.90%.
(Reporting by Tomás Cobos; editing by Jorge Ollero Castela)
