European shares tumbled to a more than one-month low on Friday on uncertainty around U.S. monetary tightening, with financial stocks sinking 4.2% after a warning from a U.S. bank spurred worries about stress in the sector.

The pan-European STOXX 600 index fell 1.7% on broad-based losses, with HSBC, Deutsche Bank , Barclays, Unicredit and Commerzbank down between 2.7% and 7.2%.

The European banking index hit a six-week low after U.S. tech-industry lender SVB Financial Group launched a share sale to shore up its balance sheet due to declining deposits from startups struggling for funding.

"Sentiment towards banking sector is very fragile after SVB's stock sale that has fueled concerns of capitalisation risk across the sector," said Fiona Cincotta, senior financial markets analyst at City Index.

"It's... opening investors' eyes to this problem which hasn't been on their radar so far. If it can happen to a U.S. bank, it could potentially happen to a bank in Europe as well."

All eyes are on U.S. non-farm payroll data due at 1330 GMT following volatility spurred by a sharp rise in U.S. jobless claims and a decline in Wall Street bank shares.

February data is expected to show an increase of 205,000 after a blowout 517,000 in January. Any surprise to the upside could strengthen bets for continued aggressive interest rate hikes.

For the week, the STOXX 600 is on track to lose more than 2.6% marking its worst week in three months, as risk appetite took a hit following hawkish comments from Fed Chair Jerome Powell.

Markets are now pricing in a higher possibility of a 50 basis points increase in Fed rates this month, as well as a likely faster pace of hikes after that.

Next week, the focus is likely to be on the European Central Bank which is expected to hike its key lending rate by 50 bps.

Among other individual movers on Friday, chipmaker

ASML Holding NV fell 2.3% on uncertainty over the Dutch government's new restrictions on chip-technology exports to China.

Software maker SAP slid 1.4% after U.S. rival Oracle Corp narrowly missed quarterly revenue estimates.

Retailer Casino lost 4.71% on a decline in fourth-quarter sales and profit.

Daimler Truck added 3.5% on dividend payment plans after hitting its 2022 targets and forecasting higher earnings and revenue this year.

(Reporting by Susan Mathew and Medha Singh in Bengaluru; Editing by Subhranshu Sahu and Dhanya Ann Thoppil)