Earnings and the state the global economy are keeping the sentiment on edge.
According to LSEG, the benchmark Stoxx 600 has had a quiet week but is on track for its worst month since September 2022.
Stocks have been affected by company results. Mercedes-Benz fell 6% when it missed estimates and signaled challenging conditions on the electric vehicle markets. Banks had a mixed-up week. Deutsche Bank gained on a better than expected forecast, while Barclays fell after warning of upcoming cost-cutting measures.
The U.K. Bank NatWest, the airline group Air France KLM and retailer H&M are expected to report earnings on Friday.
Bond yields are still high, so investors continue to focus on the central bank's messages about "higher rates for longer" and economic indicators. Stock market fears were sparked by the fact that U.S. Gross Domestic Product grew 4.9% more than expected in the third quarter.
After a run of 10 consecutive rate hikes, the European Central Bank held rates steady on Thursday. The ECB reiterated that rates were at the correct levels to achieve inflation targets if they are held for "a sufficiently long duration."
In a CNBC press conference, ECB president Christine Lagarde said that the bank has not discussed the timing of the first rate reduction and it would be "totally pre-mature" to do so.
Lagarde stated, "For the time being we say we are stable and we must hold."
The Federal Reserve's preferred measure of inflation, the personal consumption expenditures (PCE) reading for the U.S. will be released on Friday.