European markets moved lower on Friday, ending a tumultuous week marked by erratic U.S. tariff policy, the European Central Bank's latest interest rate cut, German fiscal reform and increased regional defense spending.

The U.K.'s FTSE 100 is set to open down 48.9 points at 8,643, France's CAC 40 is down 80 points at 8,146 and Germany's DAX is down 308 points at 23,136, according to IG data.

The regional Stoxx 600 index has swung between losses and gains this week amid geopolitical developments and corporate earnings. The benchmark is now headed for a weekly loss, which would be its first loss of the year.

U.S. President Donald Trump on Thursday granted temporary exemptions for tariffs on about 50% of Mexican imports and 38% of Canadian imports until April 2. The move comes a day after Trump granted a one-month tariff exemption to automakers, which are expected to be among the hardest-hit sectors; and just two days after new, sweeping tariffs went into effect.

In Europe, market watchers continue to weigh the ECB's latest quarter-point interest rate cut, its inflation and growth projections, and its message.

The euro area's central bank said monetary policy has become "significantly looser," suggesting the ECB may be more cautious at its next meeting after implementing six cuts since June. ECB staff macroeconomic projections raised their headline inflation forecast for 2025 to 2.3% from 2.1%, while lowering their growth forecast to 0.9% from 1.1%.

"While the forecasts are still pointing in the right direction, [the ECB's] communication is not," analysts at Bank of America Global Research said Thursday.

Expectations of higher defense spending across Europe also continued to weigh on markets this week, with the Stoxx Aerospace and Defense Index up 9% this week, its best performance in nearly five years.

Britain held multilateral talks last week focused on defense spending and allied support for Ukraine, while European Union leaders met in Brussels on Thursday to agree on a bloc-wide defense spending boost, despite opposition from Hungary.

Meanwhile, German stocks rose broadly on hopes of stronger economic growth and more spending on defense and infrastructure after leading politicians reached a "historic" deal on fiscal reform. (Newsmaker23)

Source: CNBC