European shares declined on Friday after two days of gains as renewed concerns about the rising cost of borrowing in some highly indebted euro zone countries dampening sentiment and hurting cyclical sectors such as banks.
World shares held steady on Friday after China's first-quarter growth failed to meet expectations, clouding the outlook for the world's second largest economy but raising the prospect of more policy stimulus from Beijing.
European Banks, many of which have a significant exposure to indebted euro zone economies, were the top decliners, dragging down the FTSEurofirst 300 index of top European shares, which was down 0.9 percent at 1,034.62 points at 11:09 SA time.
The index, which has dropped 1.6 percent so far this week, is on track for its fourth straight week of losses. Across Europe, Spain's IBEX fell 2.2 percent, while Italy's FTSE MIB index dropped 1.7 percent.
Investors kept a close eye on the euro zone debt situation, with the Spanish government bonds coming under renewed pressure after data showed the country's banks borrowed heavily from the European Central Bank (ECB) in March.
Technical analysts remained bearish on Euro zone's blue chip Euro STOXX 50 index, which was 1.4 percent lower at 2,319.22 points after turning negative on the year. Analysts said the index was testing the lower end of the trend channel that started in September.
“I see an increasing downside risk for the index in the coming weeks. This decline from its March highs around 2610 is just the beginning of a larger correction,” said Roelof-Jan van den Akker, senior technical analyst at ING Commercial Banking.
Sectors linked to economic growth and exposed to the euro zone were among the biggest decliners on concerns about global economic growth.
The STOXX Europe 600 construction and materials index fell 1.5 percent on worries that slower growth in China and some recent poor U.S. macroeconomic numbers could reduce construction activities.
“Chinese growth figures ... have disappointed and reminded that the pace of global economic growth is still very uncertain,” said Keith Bowman, equity analyst at Hargreaves Lansdown.
Figures showed China's economy grew slower than expected at its weakest pace in nearly three years in the first quarter, with annual rate of expansion easing to 8.1 percent from 8.9 percent in the previous three months.
The mining index was down 0.3 percent. However, the sector outperformed the broader market, helped by Xstrata that rose 1 percent after announcing a merger timing update with Glencore and said it is currently engaged in constructive discussions with regulatory authorities. - Reuters