U.K. stocks traded solidly lower on Friday, dragged down alongside the broader European equity market, on mounting concerns that Turkey’s currency crisis will hurt eurozone banks, but London’s blue-chips market is on course to edge higher for the week.

U.K. stocks were little changed after a reading of British economic growth came in line with expectations.

How markets are moving

The FTSE 100 UKX, -0.74% fell 0.8% to 7,682.47. On Thursday, the index lost 0.5%, ending a four-session winning streak. But for the week, the benchmark was clinging to a modest gain of 0.3%.

The pound GBPUSD, -0.3431% fell to $1.2782 from $1.2824 late Thursday in New York.

What’s driving markets

Equities across the region SXXP, -0.93% stumbled following a Financial Times report that the European Central Bank is growing more concerned about exposure of European banks to Turkey’s woes. The Turkish lira USDTRY, +6.5583% was sent plunging to its lowest in a year against the U.S. dollar on Friday.

The lira’s slide comes on questions about the central bank’s independence in the face of growing power held by President Recep Tayyip Erdogan, as well as a political rift between Turkey and the U.S.

The euro EURUSD, -0.4512% also dropped against the dollar “as investors feared European banks exposure to the lira. The common currency broke below the key 1.1500 support mark for the first time in more than a year. The fears also rippled to [the pound-dollar pair] which took out the 1.2750 barrier in early London dealing,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

Read: Dollar index jumps to around one-year high as Turkey’s lira gets rocked

Spain’s BBVA SA BBVA, -4.24% BBVA, -1.87% Italy’s UniCredit SpA UCG, -3.39% and France’s BNP Paribas SA BNP, -3.56% are among the biggest lenders to Turkey and have come under closer scrutiny by the Single Supervisory Mechanism, the ECB’s arm charged with monitoring the region’s banks, according to the FT report.

Meanwhile, retail stocks were mostly lower as upscale apparel and accessories retailer House of Fraser went into administration after a collapse in talks between the company and its creditors. But Sports Direct International PLC SPD, -0.44% has purchased the struggling chain for £90 billion, expanding a stake already held in House of Fraser by Sports Direct’s owner, Mike Ashley.

Stocks in focus

Among banking stocks, Barclays PLC BARC, -1.08% gave up 1.1%, Standard Chartered PLC STAN, -0.89% lost 0.9% and HSBC Holdings PLC HSBA, -0.44% HSBC, -0.38% fell 0.5%. Royal Bank of Scotland Group PLC RBS, -0.63% was off 0.6%. RBS was upgraded to a buy rating from neutral on Friday at UBS, which said in part that RBS’s stock hasn’t tracked positive per-share earnings revisions.

Among retailers, apparel seller Next PLC NXT, -0.97% fell 1.2% and department store operator Marks & Spencer Group PLC MKS, -0.69% gave up 0.9% but Debenhams PLC DEB, +1.30% rose 2.2% off the FTSE 100 as Mike Ashley holds a stake in that department store.

Ryanair Holdings PLC shares RYA, -2.15% fell 2.6% as the airline said it plans to operate 85% of its schedule Friday as pilots in five European countries take strike action. That is the fifth strike action since July 12.

Diageo PLC DGE, -0.23% was off by 0.2%, even after the maker of Gordon’s Gin and Smirnoff vodka said it would start buying back up to 1.4 billion pounds ($1.79 billion) of its shares until Jan. 31.

Economic data

The U.K. economy expanded at a rate of 0.4% in the three months to June, bolstered by construction and services activity, a faster rate than 0.2% in the first quarter of 2018. The economy expanded at an annualized rate of 1.5% in the second quarter, the Office for National Statistics said Friday, faster than the 0.9% rate in the first quarter.

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