- Deadline looms for US lawmakers for federal spending deal
- Europe's unemployment reaches record high
- Italy no closer to solving deadlock election

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The main European equities slid into the red Friday as investors bit their nails waiting to see if US lawmakers would meet their deadline to agree a deal on spending cuts.

President Barack Obama has called on a meeting with congressional leaders in the White House Friday to reach a decision that will avoid automatic reductions across the board .

The President has until midnight in Washington before the so-called 'sequestration' takes effect including $85bn in the last seven months of this fiscal year and a total of $1.2tn over nine years.

If there is no other way to reduce the deficit, Obama will sign an order directing government agencies to begin implementing the cuts.

Hopes of reaching an agreement have faded after months of talks between Republications and Democrats. Obama's proposal for €110bn in progressive cuts was rejected by the Senate on Thursday with 51 votes to 49.

Deutsche Bank's chief US economist Joseph LaVorgna said the sequestration could take 40 basis points off gross domestic product in 2013, "possibly higher, depending on whether the fiscal multiplier is positive".

"However, we believe there is a good chance that sometime over the next few weeks, the Administration and Congress will water down these spending cuts," LaVorgna added.

Eurozone unemployment at record highEurozone unemployment hit a new high in January as the bloc continues to pull itself out of the recession, according to new Eurostat data Friday.

The European Union's seasonally-adjusted unemployment rate rose to 11.9% from the prior month's reading of 11.8%.

Europe's third-largest economy, Italy, saw unemployment rocket to 11.7% following reading of 11.3% the month earlier. It comes as the country's political parties wrangle to solve a hung parliament following the weekend election.

Democratic Party leader Pier Luigi Bersani won lower house majority but not enough seats to control the Senate. In the latest news, President Giorgio Napolitano ruled out a return to the polls Friday as a way to fix the deadlock.

Banks and mines retreat

Lloyds Banking Group shares were down after the company reported a statutory loss of £570m for 2012, mainly due to payment protection provisions totalling £3.58bn.

Rio Tinto slumped as a number of mining companies posted the largest decline of the 19 industry groups in the Stoxx 600.

Kazakhmys fell as Liberum downgraded the copper producer to 'hold' from 'buy', citing higher unit costs at its businesses.

Deutsche Bank tumbled as Germany's largest bank was downgraded to 'sell' from 'neutral' by Goldman Sachs Group.

Euro/dollar drops

The euro/dollar was lower by the end of the session, down 0.54% to the 1.2986 dollar mark.

Front month Brent crude futures were down by 1.098 dollars to the 110.180 dollar per barrel level on the ICE.

RD

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