Europe's banks see biggest weekly selloff since March 2023

LONDON (Reuters) - An index of European banks headed for its biggest weekly fall in 17 months on Friday, thanks to soft earnings earlier in the week and a global equity sell-off gathering pace.

The STOXX index has fallen 5.8% this week, as Friday's 2.1% drop built on Thursday's 4.5% decline. That would be its biggest weekly drop since March 2023, when the sector was rocked by the collapse of Credit Suisse and concerns over the stability of U.S. regional banks.

Global central banks are starting to cut interest rates - the Bank of England cut on Thursday and the Federal Reserve is gearing up for a cut next month - which tends to erode lenders' profitability.

Societe Generale has been central to the move. On Thursday it cut its guidance for its French retail net interest income, sending its shares down 8% and weighing on the broader sector. They were down a further 4.7% on Friday at their lowest since October.

Swiss bank UBS, which is not in the banking index, saw its shares fall 6.5% on Friday, catching up with the move after Swiss markets were closed for a holiday on Thursday.

The move in banks is part of a broad sell off in equity markets with other sectors including tech getting hard hit. Data showing global growth is slowing and central bank rate cuts gathering pace are not helping lenders either.

Europe's banks have lost almost $100 billion in market value in the space of just a week, according to LSEG data.

(Reporting by Alun John; Editing by Amanda Cooper)

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