European stocks closed in the red on Friday but above their session lows as a weakening US dollar hit exporters including automaker Volkswagen and dollar earners such as mining company BHP Billiton.
Trading was thin as many US participants took the day off, extending Thursday's Thanksgiving Day holiday into a four-day long weekend.
"It's been a disappointing week, to be frank," said one London-based trader. "We've had some excellent [economic] numbers out of the US but Thanksgiving has interrupted things and the weak dollar is creating some nervousness."
The euro hit a fresh all-time high of over US$1.20 as option expiries and concerns about the massive US current account deficit drove a broad-based fall in the dollar. Analysts said the euro's advance, up 15 percent so far this year, could continue.
"The US authorities are not unhappy about the dollar's decline and will maintain this position until either the trade position has stabilised or the dollar's weakness starts to undermine the treasury market," said Bear Stearns chief European economist David Brown.
"We think that we are a very long way away from this situation and hence dollar weakness has many, many months, if not years, to run."
The FTSE Eurotop 300 index of pan-European blue chip stocks closed down 0.5 percent at 931 points on modest turnover of 2.2 billion euros.
The narrower DJ Euro Stoxx 50 index ended 0.1 percent lower on the day, but up two percent on the week.
Gary Dugan, European strategist at JP Morgan Fleming Asset Management, said indexes could rise further before the year-end.
"There's a bit of indecision, but as we go through December, we're going to hear some pre-announcements from companies, and I think in a large part they are going to be positive. Companies will be getting more confident about the future and that will give a spur to the market."
Stock markets in the US close at 1:00pm EST, with bond trading due to finish an hour later. Around Europe, London's FTSE 100 closed 0.4 percent lower, Zurich's SMI index fell 0.1 percent and Frankfurt's DAX closed flat.
Paris' CAC-40 closed down 0.2 percent and 10 minutes late at 1640 GMT as the index shifted to a free-float method of calculating stock weightings.
Stocks expected to have their influence lessened include France Telecom, partly state-owned aerospace company EADS and insurer AGF, while oil giant Total, drug maker Sanofi-Synthelabo and cement producer Lafarge will carry heavier weightings.
Automakers suffered as the rising euro increased concerns that sales in the key US market would be hurt.
VW was down 1.9 percent, luxury car maker BMW fell 2.0 percent and Porsche, which sells around half its sports cars to the US, ended 1.8 percent weaker.
Miners and other basic resource stocks also lost ground, as much of their products are priced in US dollars.
The DJ Stoxx European basic resources index ended down 1.0 percent, led by a 1.2 percent fall for BHP Billiton and a 1.5 percent decline by peer Rio Tinto.
Denmark's Vestas, the world's leading wind turbine maker, topped the list of declining stocks, down 20 percent after it cut its profit margin forecasts for this year and sales forecasts for next year.
The stock has plunged as much as 28 percent in just over a week.
On the positive side, Finland's Tecnomen was up 38 percent after the telecom software maker unveiled a 7.2 million-euro order to upgrade the messaging service offered by Taiwan's Chunghwa Telecom (