(Bloomberg) -- European stocks posted their worst weekly performance in a month as risk sentiment took a hit on worries that interest rates will remain high for longer than previously expected. 

The Stoxx 600 Index closed 0.3% lower in London, taking this week’s declines to 1.9%. Construction and utilities stocks were the biggest laggards, while technology and mining outperformed. 

The UK’s FTSE 100 Index advanced 0.1% amid a weaker pound and gain for AstraZeneca Plc following a positive drug trial update. The British gauge has handily outperformed the Euro Stoxx Index this month.

ING Groep NV and ABN AMRO Bank NV fell after a majority of the Dutch parliament’s second chamber approved a proposal to increase bank taxes. Adevinta ASA shares soared after the European classifieds company said it has received a takeover proposal from a private equity consortium that includes Blackstone Inc. and Permira.

“Equities have been range-bound this year and we don’t see catalysts ahead, as the economy is holding on fine but there is a lack of dynamism that could propel corporates profits growth,” said Francisco Simón, European head of strategy at Santander AM. “The key question for markets is how long rates will stay higher and we expect central banks to remain cautious.”

US Treasury 10-year yields edged above 4.5% on Thursday for the first time since 2007, after a more hawkish Federal Reserve stance this week is cementing expectation that rates will stay higher for longer. Bank of England hike pause Thursday has been overshadowed by concerns over global surging borrowing costs.

Rates Are Like Mountains. It’s About Getting Down: John Authers

Those worries have led to strategists seeing no further upside in European stocks for the rest of the year. The Stoxx Europe 600 index should end the year at 453 points, according to the average of 16 forecasts in a Bloomberg survey, or just 2% below Wednesday’s close.

For more on equity markets:

  • Europe to See Flat Returns in Higher Volatility: Taking Stock
  • M&A Watch Europe: Adevinta, Vodafone, Zegona, Coty, Italgas
  • Middle East Is Set to Host Its First-Ever SPAC Deal: ECM Watch
  • US Stock Futures Unchanged; Scholastic, Beyond Meat Fall

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--With assistance from Michael Msika and Kit Rees.

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