- German election looms
- Fed's George to speak in New York
- New EU regulation comes under fire
FTSE 100: -0.20%
CAC 40: -0.21%
FTSE MIB: -0.10%
IBEX 35: -0.12%
Stoxx 600: -0.06%
European equities slumped as investors braced themselves for this weekend's German elections.
An INSA opinion poll 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.
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%.
Despite Merkel's popularity, the fresh polls underline the difficulty she faces ahead.
Her Social Democratic rival, Peer Steinbrück, told his party to take advantage of weakening support for the chancellor.
The fall in European stocks follow Thursday's surge to a five-year high after the US Federal Reserve surprised the market by saying 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.
Later on Friday, 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.
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.
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.
"As is often the case, few will recall this amendment in a years time, by which point the figures could be particularly rosy and that increased confidence does allow for more progressive and optimistic investment and consumption decision."
Adidas, Direct Line
Adidas declined after cutting the low end of its profit forecast for 2013 by 7.9%.
Direct Line dropped after Royal Bank of Scotland sold 300m shares
at 210pe 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 commodities retreated.