UPDATE 2-European stocks pressured by yields, but mark weekly gains on firm cyclicals

* LSE worst performer on STOXX 600
* Tech underperforms for second straight week
* STOXX up 0.9% this week
* Cyclical stocks outperform in the week

(Updates to market close)
By Sruthi Shankar and Ambar Warrick
March 5 (Reuters) - European equities closed lower on Friday
as bond yields rose on inflation expectations that were pushed
up by strong U.S. payrolls data, although the STOXX 600 index
marked a weekly gain on strength in growth-sensitive sectors.
The pan-European STOXX 600 .STOXX dropped 0.8% on the day,
with shares of travel .SXTP and financial services firms
.SXFP leading losses.
But the index rose 0.9% for the week, as optimism over an
eventual economic recovery this year saw investors pile into
sectors most likely to benefit from a bounceback. Automobile
.SXAP stocks outpaced their regional peers with a 4.9% jump.
U.S. Federal Reserve Chair Jerome Powell on Thursday said
the recent spike in yields did not warrant intervention by the
central bank to bring them down. U.S. and European bond yields pushed higher after his
statements, while U.S. yields were also supported by
stronger-than-expected payrolls data, which pushed up inflation
expectations. US/ GVD/EUR
But analyst expectations for euro zone growth are much tamer
this year, with some even welcoming the rise in local bond
yields as a sign of reflation.
"In the U.S., improving growth expectations are raising the
term premium and justifying at least some of the higher pressure
on yields. However, the situation in the European area (EA) is
very different," analysts at TS Lombard wrote in a note.
"The U.S. Congress is about to pass a large fiscal stimulus
package, while EA governments struggle to commit to higher
spending... slack in EA economies is expected to persist at
least until mid-2022, in contrast with the U.S."
Still, rising inflation expectations this year have pushed
up yields and pressured high-growth tech companies and steady
dividend-paying sectors such as utilities and healthcare in
recent weeks.
Technology .SX8P was the weakest-performing European
sector for the second week in a row, while utilities .SX6P and
healthcare .SXDP also lagged.
Data showed orders for German-made goods rose by twice as
much as expected in January as robust foreign demand more than
offset domestic weakness. Analysts expect overseas demand to
support the euro zone manufacturing sector this year.
Oil stocks .SXEP rose 0.7%, supported by crude prices
rising to near 14-month highs after OPEC and its allies agreed
not to increase supply in April. O/R
Among individual movers, London Stock Exchange Group
LSEG.L dropped to the bottom of the STOXX 600 as analysts
scrutinised the costs for integrating data and analytics company
Refinitiv. French aircraft manufacturer Dassault Aviation AVMD.PA
fell 3% after recording a drop in quarterly adjusted operating
income.