Europe's main stock markets mostly fell on Friday as investors fretted over Italy's post-election deadlock, poor economic data, looming US budget cutbacks and a raft of company results.
London's FTSE 100 index of leading companies bucking the trend to add 0.28 percent to close at 6,378.6 points on the back of encouraging US data including a third-straight month of increasing manufacturing.
Frankfurt's DAX 30 shed 0.43 percent to 7,708.16 points, and in Paris the CAC 40 lost 0.62 percent to 3,699.91 points.
Milan's FTSE Mib index lost 1.54 percent to 15,675 points as rising Italian unemployment numbers compounded worries about ongoing political uncertainty following inconclusive elections earlier this week.
Madrid's IBEX 35 retreated 0.52 percent to 8,187.1 points after gloomy news that Spain's manufacturing sector continued to shrink in February.
The euro fell to $1.2984 from $1.3062 late in New York on Thursday. Gold prices declined to $1,582.25 an ounce on the London Bullion Market from $1,588.50 on Thursday.
The looming $85-billion in indiscriminate, across-the-board US budget cuts known as the sequester, which are due to kick in on Friday unless politicians agree to alternatives cast a shadow over most of the European trading session.
Official data also painted a far from encouraging picture of the European economy, with unemployment running at record and "unacceptable" highs in the eurozone while inflation fell sharply, highlighting the weakness of consumer demand.
"European markets are under pressure, slapped by a combination of uncertainties over Italy's political outlook, the failure to avert the US sequester by lawmakers in Washington and damp economic data," said analyst Ishaq Siddiqi at trading group ETX Capital.
However "equities have been dragged higher in afternoon trade on the back of bullish US macro data, as well as optimism over progress in sequester negotiations," said CMC Markets trader Toby Morris.
US manufacturing activity expanded in February for the third month in a row, hitting the highest level since 2011, according to the ISM survey of purchasing managers released Friday.
Automakers also reported modest gains in February US sales, and consumer sentiment improved.
US stocks recouped early losses to show modest gains in midday trading.
The Dow Jones Industrial Average added 0.09 percent to 14,067.12 points, the broad-based S&P 500 climbed 0.13 percent to 1,516.58, and the tech-rich Nasdaq Composite edged up 0.03 percent to 3,161.27.
Equities had risen in Europe on Thursday as dealers brushed aside lower-than-expected US economic growth to focus on upbeat jobs data in the world's biggest economy, dealers said.
However, investor sentiment was hit Friday also by weak data in China -- and in the 17-nation eurozone where unemployment rose to a record 11.9 percent in January from 11.8 percent in December, with nearly 19 million people out of work.
Asian stock markets mostly ended lower on Friday in the wake of figures showing a slowdown to Chinese manufacturing activity, while shares in European miners fell on the back of the data.
In London, global miner Anglo American saw its share price slide 1.14 percent to 1,900 pence and peer Rio Tinto dropped 2.8 percent to 3,442 pence. Shares in steelmaker Arcelor Mittal lost 2.4 percent to 11.24 euros in Paris.
"Disappointing manufacturing numbers out of China, showing a slower pace of expansion on the back of weakening domestic demand, are weighting on the miners," added analyst Anita Paluch at Gekko Markets.
China's official purchasing managers' index showed activity in the crucial manufacturing sector eased to 50.1 last month from 50.4 in January, suggesting a recent pick-up in the world's number two economy is weaker than initially thought. A reading above 50 indicates growth.
Elsewhere on Friday, shares in Britain's state-rescued Lloyds Banking Group fell 2.24 percent to 53.25 pence.
Lloyds on Friday posted a 2012 net loss of £1.43 billion ($2.16 billion, 1.66 billion euros), rocked by huge compensation for insurance mis-selling, but awarded its boss a large performance bonus for the year.
The lender, which is 39-percent owned by the taxpayer, added however that pre-tax losses narrowed sharply to £570 million, from £3.5 billion last time around.
On the upside in Paris, shares in French defence electronics giant Thales soared 12.3 percent to 30.30 euros, as the stock was boosted by a bullish trading update that was issued the previous day.