European stock markets faced a sharp decline this week, with the pan-European STOXX 600 index dropping 2.5%, marking a significant reversal after four consecutive weeks of gains. The index closed at 610.65, its lowest in over two weeks. The downturn is primarily attributed to investor fears regarding inflation and energy supply disruptions stemming from the ongoing conflict in the Middle East. Most regional markets followed suit, with Spain's benchmark index falling 1.1% and France's down 0.8%. Despite these challenges, technology stocks managed to perform well, with SAP shares soaring 4.7% after the company reported better-than-expected first-quarter profits driven by strong growth in its cloud services. In contrast, sectors like aerospace and defense saw declines, with a 3.2% drop. The European Central Bank's upcoming meeting is anticipated to maintain current interest rates, although traders are bracing for potential hikes later in the year if energy disruptions continue. This uncertainty is compounded by deteriorating German business sentiment, which could hinder the recovery of Europe's largest economy.