European stocks, led by volatile insurance shares, ended the week off five-month highs on Friday after disappointing US consumer sentiment and expectations cut short a recent rally fuelled by glimmers of economic turnaround.
Thomson, the world's fourth-largest consumer electronics, led technology shares lower after it cut this year's outlook and unveiled a restructuring that includes some 800 job cuts at a television parts factory in the US.
But Inditex, the Spanish owner of fashion chain Zara, was a bright spot after posting a better-than-expected 23 percent rise in first-quarter net profit. It shares tacked on about 5.6 percent.
The FTSE Eurotop 300 index was down 1.5 percent at 853 points, erasing weekly gains of as much as two percent to end the week three points lower than last Friday's close.
The DJ Euro Stoxx 50 index was 1.6 percent weaker at 2,440 points while in New York, the Dow Jones industrial average and the tech-laced NASDAQ Composite shed 1.2 percent and 1.6 percent respectively.
The University of Michigan reported that its preliminary index of consumer sentiment had fallen to 87.2 this month from last month's 92.1, widely undershooting expectations for 93.4.
Consumer confidence is often seen as a precursor to consumer spending, which drives two-thirds of the US economy. But economists sometimes play down its impact, citing discrepancies between what consumers feel like doing and what they actually do.
Even more worrying, the survey's gauge of consumers' outlook for the economy slumped to 84.2 from 91.4 last month, suggesting that Americans were having a hard time sustaining the optimism that followed the end of the war in Iraq.
"The [US] figures are awful," said Valerie Plagnol from CIC in Paris. "Consumers are destabilized and will remain so for as long as the job situation will continue to deteriorate."
Plagnol said that the sentiment index remained to be confirmed by actual consumption figures but added that growth was likely to remain slow in the next quarters, hence capping the economy's potential for acceleration.
Around Europe, Britain's FTSE 100 and France's CAC-40 indices closed 0.7 and 1.4 percent lower respectively while Germany's DAX sagged 1.6 percent.
Insurers, so called high-beta stocks that emphasise overall market moves, spearheaded blue-chip decliners as investors pocketed recent profits. Germany's Allianz was down four percent while Dutch peer Aegon sagged 6.7 percent.
Dutch retailer Ahold was another victim of profit-taking after a recent winning streak nearly doubled its stock value, and amid investor nervousness as the group prepares to unveil the results of three final probes in a step to lay to rest a devastating accounting scandal.
Germany's DaimlerChrysler and France's Renault drove the region's carmakers down after a European Automobile Manufacturers Association report said sales of new cars in the EU had fallen 5.2 percent year-on-year last month.
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