European stocks slipped lower Friday as the surging U.S. dollar lifted bond yields around the world and hammered domestic currencies in the wake of hawkish comments from Fed Chair Janet Yellen and a dovish speech from ECB President Mario Draghi.

Britain's FTSE 100 fell 46 points, or 0.70% by 09:15 GMT, led lower by basic materials stocks, while France's CAC-40 declined 20 points to 4542 in the opening hour of trading. Germany's DAX performance index, which was a notable upside mover at the start of trading, fell 22 points, or 0.2%, despite a 1.3% gain for Volkswagen AG (VLKAY) after it unveiled as many as 30,000 job cuts at a Friday press conference in Wolfsburg.

VW shares rose as much as 1.8% in the opening minutes of trading before paring gains to around 1.3% and changing hands at €13.06 each by 09:15 GMT. 

The dollar index, a measure of the greenback's strength against a basket of six major global currencies, continued to power ahead in European trading following hawkish comments Thursday from Yellen, who told the Congressional Joint Economic Committee that future rate increases would likely come "relatively soon".

"The evidence we have seen since we met in November is consistent with our expectation of strengthening growth and improving labor markets and inflation moving up," Yellen said. "The risk of falling behind the curve in the near future appears limited."

After touching 101.26 in early European trading, the index eased to 101.22 but still remains elevated at 14 year highs and on the longest string of daily gains since 2012.

The currency market impact from Yellen's testimony spilled over into foreign exchange markets around the world and helped lift 10-year Treasury bond yields to their highest levels in nearly a year. 

The People's Bank of China was one of the early responders, pegging its currency trading band against the dollar lower, at 6.879, or the 11th consecutive session, the longest losing streak since the yuan began trading more freely in 2005.

The European single currency, which had slipped under 1.06 against the greenback in overnight trading, extending declines to a 10th straight day, fell harder at the open, to 1.0586, after the release of a perceived dovish speech from European Central Bank President Mario Draghi.

"Despite the uplift to prices provided by the gradual closing of the output gap, a sustained adjustment in the path of inflation still relies on the continuation of the current, unprecedented financing conditions," Draghi told the annual European Banking Congress in Frankfurt. "It is for this reason that we remain committed to preserving the very substantial degree of monetary accommodation, which is necessary to secure a sustained convergence of inflation towards level below, but close to, 2% over the medium-term."

The euro recovered some ground, however, to trade at 1.0605 by 09:15 GMT.

European government bond yields continued to climb higher after benchmark 10-year U.S. Treasuries neared a 52-week high of 2.33% in Asia trading, with 10-year bund yields adding 3 basis points, or 0.03%, to change hands at 0.31%. Italy's 10-year bonds were one of the most-affected, with traders adding 13 basis points to 10-year yields, taking them to 2.16% and widening the extra yield, or spread, that investors demand to hold them over triple-A rated bunds to 183 basis points.

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