- Germany prepares for federal election
- Euro-area consumer confidence report
- Fed's George to speak in New York post-meeting
- EU regulation criticised
- UK public finances improve
FTSE 100: -0.07%
CAC 40: 0.03%
FTSE MIB: -0.25%
IBEX 35: -0.21%
Stoxx 600: -0.07%
European stocks snapped Thursday's five year rally as the Federal Reserve hype died down and investors turned to Sunday's German federal elections and the release of a report on euro-area consumer confidence.
An INSA opinion poll on the German election published Friday showed the opposition Social Democrats climbing one percentage point to 28%, 10 points behind Angela Merkel's Christian Democrats party. The parties both fell short of a majority.
Free Democrats, the governing coalition's partners, failed to reach the 5% threshold they need to enter parliament.
Another survey, conducted by telephone for the public television network ZDF, showed the Chancellor's centre-right party is backed by 40% of voters, while the centre-left Social Democrats earned the backing of 27%. The Free Democrats, were supported by 6%.
Despite Merkel's popularity, the fresh polls signal a difficult road ahead this weekend, meaning she may have to form a government with another party.
Her Social Democratic rival, Peer Steinbrück, told his party to take advantage of weakening support for the chancellor.
Also high on investors' raiders today is the release of the European Commission's confidence report. The index of consumer sentiment is expected to show an increase to minus 14.5 in September from minus 15.6 in August when released at 16:00 in Brussels.
European markets are shifting their focus to economic data and the German elections after rallying on the back of the Fed's unexpected announcement that it would keep up its $85bn per month in bond purchases as it awaits a more sustainable recovery.
However, the Fed said it could still be scaled back before the end of the year.
Shavaz Dhalla, a Financial Trader from Spreadex, said that the post-Fed rally has "begun to lose steam".
"Clearly with many markets trading at such high levels, investors are starting to wonder if the present valuation of equities is too high and maybe taking a step back from the markets and awaiting the next economic disaster could provide a better buying opportunity," he said.
Kansas City Federal Reserve President Esther George, who was one of the few policymakers to back a tapering of the Fed's stimulus, will speak in New York later today.
George had suggested the central bank reduce its $85bn per month in asset purchases by $15bn to $70bn ahead of this week's policy meeting.
The Fed wasn't the only central bank to surprise markets this week as the Reserve Bank of India (RBI) announced a 25 basis-point rise in its main policy rate, to 7.5% from 7.25%, although it unwound some short-term tightening measures.
EU regulation faces criticism
European finance officials have approved a change to the region's budget policies which allows for lowered austerity requirements among the hardest hit countries in the Eurozone.
"The decision to allow an amendment to a calculation by the European Commission to alleviate the requirements in relation to the size of budget deficits being run within each country is certainly controversial and has been met with significant criticism," said Joshua Mahony, Research Analyst at Alpari.
"There are worries as to whether such a measure would allow nations to resume normal business and cast aside austerity measures with significantly improved data."
However, Mahony noted that many see this as a necessary towards loosening the framework for more troubled nations to pull themselves out of financial ruins.
Tate & Lyle, Adidas
Shares in food and sweeteners manufacturer Tate & Lyle fell after the Credit Suisse reduced its rating from 'outperform' to 'neutral'.
Adidas declined after cutting the lower end of its profit forecast for 2013 by 7.9%.
Direct Line dropped after Royal Bank of Scotland sold 300m shares
at 210p each in its third sale of a stake in the insurance company.
A gauge of miners including Randgold Resources and Vedanta Resources snapped Thursday's rise as the prices of gold, silver and copper retreated.
Britain's public finances improve
UK public finances showed a smaller than anticipated deficit in August, supported by a drop in spending by government departments. The deficit was £13.157 in August, the Office for National Statistics said, compared to £14.409bn the same month last year and forecasts of £13.5bn.
Other data from the ICE, showed Brent crude futures rose $0.421 to $109.220 per barrel.
The euro increased 0.13% to the 1.3548 US dollar.