(Bloomberg) -- European shares trimmed earlier gains after Federal Reserve Chair Jerome Powell said the US central bank is prepared to raise interest rates further if needed.

The Stoxx Europe 600 Index closed little changed in London, erasing earlier gains of as much as 0.7%. Watches of Switzerland Group Plc plunged after Rolex SA agreed to buy Bucherer AG, upending the world of luxury watch retailing.

The main regional benchmark eked out a slight gain for the week after three weeks of declines. This year’s European equities rally has faltered in August amid renewed worries over China’s property and shadow banking sectors and the effect of higher interest rates on the economy. 

“We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective,” Powell said in the text of a speech Friday at the US central bank’s annual conference in Jackson Hole, Wyoming.

Also speaking from Jackson Hole, ECB Governing Council member Joachim Nagel said he’s not convinced inflation is under control enough for a halt in interest rate hikes.

“The latest remarks from Fed Chair Jay Powell continue to highlight the higher-for-longer mantra and potential for further hikes if needed,” Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, said. “Focus remains on inflation as has been the case for much of 2023 despite recent signs of disinflation.”

Watches of Switzerland plunged as much as 30% in London. Peel Hunt cut the stock to hold from buy, saying Rolex’s acquisition of Bucherer could affect where Rolex decides to allocate its timepieces. About half of Watches of Switzerland’s sales are Rolex, Peel Hunt said.

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--With assistance from Kit Rees.

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