Gold prices hit $2020 an ounce as they made their biggest one-week rally since March 2000. The rise of gold could not be prevented by the bank bankruptcies that started in the USA and the measures taken to prevent the decline in banking stocks and global stocks. Investor sentiment remained fragile on Friday, despite massive bailouts for failing banks.
U.S. Treasury yields continued their decline and oil prices fell to a 15-month low.
Data showed US consumer sentiment fell for the first time in four months in March.
In the crisis that started with the bankruptcy of US-based Silicon Valley Bank last Friday, investors lost confidence in US regional banks and Credit Suisse in Europe.
Risk appetite dwindled on Friday after showing signs of recovery on Thursday. Credit Suisse's CEO said on Friday that the bank is working hard to stop customer exits, but that may take time. Credit Suisse shares continued to decline.
Analysts say worries about a possible banking crisis are far from over, as a group of major banks injects $30 billion in deposits into a midsize US lender First Republic Bank on Thursday.
The MSCI world stock index, which tracks shares in 49 countries, fell 0,55 percent.
European stock markets erased their early gains and the pan-European STOXX 600 finished down 1,3%, the hardest weekly drop in five months. It was under pressure from bank, insurance and financial services stocks.
ECB supervisors told Reuters that a source familiar with the context of an interim supervisory board meeting this week did not expect market turmoil to contaminate euro zone banks.
The Dow Jones Industrial Average fell 384.57 points, or 1.19%, to 31.861.98, the S&P 500 .SPX fell 43.64 points, or 1.10%, to 3.916.64, and the Nasdaq Composite .IXIC fell 86.76 points, or 0.74%, to 11.630.51. .
In the past two weeks, the S&P Banking index and the KBW Regional Banking index have experienced their biggest two-week declines since March 4,6, with 5,4% and 2020% respectively.
The yield on benchmark 10-year Treasuries fell to 3.583%, compared to 3.423% previously. The two-year yield fell to 4.13 percent from the previous close of 3.8354%, boosted by traders' anticipation of higher Fed funds rates.
Germany's 10-year government bond yield fell to 2.069% in the late session, its lowest level since the beginning of February.
The ECB raised interest rates by 50 basis points on Thursday and remained true to its disinflation commitment, although some investors have called for a pause in the rate-raising cycle until the banking turmoil eases.
Markets are pricing in a 50 basis point increase, below the 25 basis point increase expectation at the US Federal Reserve's meeting next week.
Thursday's Fed data showed banks have sought record amounts of emergency liquidity in recent days, helping to undo months of efforts by the central bank to shrink its balance sheet size.
"It's potentially beneficial for the Fed to be very proactive about turning on the liquidity faucet, and that has stabilized things, at least in the short term," said Guillaume Paillat, multi-asset portfolio manager at Aviva Investors.
"Potentially a more stable environment, because we think we're past the crisis point and things should normalize a bit."
The University of Michigan's preliminary reading for the general consumer sentiment index came in at 67, down from 63.4 the previous month. Economists polled by Reuters estimated a preliminary reading of 67.0. However, households expected inflation to decline in the next 12 months and beyond.
“As the economy slows and inflation remains a headwind, consumers are showing signs of retreating under pressure,” said Jeffrey Roach, Chief Economist at LPL Financial. "Inflation expectations are falling, which gives the Fed some flexibility on its future rate hike path," he said. Charlotte, North Carolina.
Manufacturing continued to struggle under the weight of high borrowing costs.
Spot gold prices rose 3.01% to $1.976.84 an ounce after hitting their highest level since April. U.S. gold futures were up 2,6% at $1.973,50.
Bitcoin also rose in safe-haven purchases and hit a nine-month high.
The euro was up 0,79% in a month at $0,5, up 1,066% on the day, while the dollar index, which tracks the dollar against a basket of currencies from other key trading partners, fell to 103,9.
The feeling of risk aversion also affected oil prices. In session lows, both benchmarks dropped more than $3. Brent crude, the global benchmark, fell nearly 12% for the week, its biggest weekly drop since December. U.S. futures fell 13% since Friday's close, the biggest drop since last April.