* Bond proxy sectors the worst performers in Feb
* Tech leads losses for the week
* Travel, bank stocks shine in Feb (Updates to market close)
By Shashank Nayar and Ambar Warrick
Feb 26 (Reuters) - European stocks closed lower on Friday, ending three weeks of gains as investors booked profits in technology and commodity-linked shares due to concerns over rising inflation and interest rates on the back of a jump in bond yields.
The benchmark European stock index .STOXX fell 1.6%, and shed 2.4% for the week - its first weekly loss this month - with technology stocks .SX8P losing the most as they continued to retreat from 20-year highs.
On the day, resource stocks .SXPP were the softest-performing European sectors, tumbling 4.2% from a near 10-year high in their worst session in five months.
"Equity markets across the U.S. and Europe are quite expensive now and with bond yields constantly rising, the fixed income market is proving to be more attractive than the riskier equity market," said Roland Kaloyan, a strategist at SocGen.
"Investors are actually looking at the pace at which yields drop and the current speed is quite concerning for equity markets."
U.S. and euro zone bond yields retreated slightly on Friday, but stayed close to highs hit this week as investors positioned for higher inflation this year. Yields were also set for large monthly gains. GVD/EUR US/
Sectors such as utilities .SX6P , healthcare .SXDP and other staples - usually seen as proxies for government debt due to their similar yields - lagged their European peers for the month as investors sought better returns from actual debt.
Still, the benchmark STOXX 600 gained in February, helped by a rotation into energy, banking and mining stocks on expectations of a pickup in business activity following vaccine rollouts.
Better-than-expected fourth-quarter earnings have also reinforced optimism about a quicker corporate rebound this year. Of the 194 companies in the STOXX 600 that have reported quarterly earnings so far, 68% have beaten analysts' estimates, according to Refinitiv.
"As recovery hopes gain ground with the economy re-opening and vaccines coming up, coupled with earnings being relatively positive, the near-to-mid-term outlook for equities seems positive with yield movements still a part of the equation," said Keith Temperton, an equity sales trader at Forte Securities.
Among individual movers, Belgian telecom operator Proximus PROX.BR was the worst performer on the STOXX 600 for the day, after it flagged a lower core profit in 2021.
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