- Auto stocks hit Feb 2021 lows
- STOXX 600 eyes worst week since COVID selloff
- European volatility gauge crosses 45 points
March 4 (Reuters) - European stocks sank to near 1-year lows on Friday, as auto and bank stocks took a battering on reports of a nuclear power plant on fire amid fierce fighting between Ukraine and Russian troops.
The pan-European STOXX 600 index fell 2.8%, on course for its worst weekly decline since the pandemic fuelled selloff in March 2020.
A huge blaze in a building at the site of Europe's biggest nuclear power station in Ukraine that was seized by Russian forces in heavy fighting, caused global alarm earlier on Friday. The fire was later extinguished and officials said the plant was operating normally.
Safe-haven gold and bond prices jumped as investor nerves ran high, with a measure of volatility in euro zone stocks hitting 45 points for the first time since June 2020.
The auto-heavy German DAX fell to 3.6% to hit fresh one-year lows as carmakers tumbled 5.7%, becoming the worst performers this week among European sectors.
"No one buys a new car when commodity prices are going through the roof," said Michael Hewson, chief market analyst at CMC Markets. "Their sales and margins are going to be significantly lower. Consumer disposable income is going to take a significant hit because of higher food and gas prices."
Among other regional indexes, France's CAC 40 dropped 3.6%, Italy's FTSE MIB sank 4.2% and UK's FTSE 100 slid 2.9%.
European markets have been at the centre of a market selloff fuelled by concerns about the region's geographical proximity to Russia and its heavy reliance on Russian gas supplies.
Euro zone banks tumbled 4.5% as government bond yields fell, with soaring commodity prices, triggered by Western sanctions against Russia - a top commodity exporter, raising concerns about runaway inflation and slowing economic growth.
Dutch bank ING dropped 6.1% after it said that about 700 million euros ($771 million) in outstanding loans were affected by "new sanctions on (Russian) specific entities and individuals".
With oil prices soaring, airlines also came under pressure, with shares in Germany's Lufthansa, British Airways-owner IAG and Wizz Air falling between 5.2% and 7.2%.
Michelin dropped 6.1% after the French tyre maker said it would temporarily halt production at some of its plants in Europe due to logistical issues.
Reporting by Sruthi Shankar in Bengaluru; Editing by Julien Ponthus in London and Shinjini Ganguli