European shares fell on Friday and were set for a weekly loss, on fears that a tighter monetary policy, inflationary pressures, and an energy crisis could push the global economy into a recession.

The pan-European STOXX 600 slid 0.3% as of 0721 GMT, with travel stocks leading the declines.

Among the biggest drags was French catering and food services group Sodexo, down 1.9%, after Jefferies cut the stock to "hold" from "buy" to factor in a cautious recessionary scenario over fiscal year 2023-2024.

The benchmark is set to end the week about 0.3% weaker, as gains in commodity-linked oil stocks and miners as well as food & beverage stocks were offset by declines in real estate and retail shares.

FLSmidth jumped 7.3% after raising its annual sales outlook as the mining equipment and cement maker beat second-quarter earnings forecasts.

German producer prices in July saw their highest ever increases both year-on-year and month-on-month as energy costs skyrocket due to the Ukraine war. Germany's blue-chip DAX slipped 0.3%. (Reporting by Anisha Sircar in Bengaluru; editing by Uttaresh.V)