European shares slipped on Friday as disappointing economic data in the UK and U.S. dampened sentiment, but technical support and on-going central bank stimulus measures kept indexes at multi-month highs.

The pan-European FTSEurofirst 300 Index provisionally closed down 0.1 percent or 1.01 points at 1,164.53 points.

The outlook for global growth took a knock after a shock fall in UK retail sales cast a pall over 2013 expectations, while in the United States consumer sentiment unexpectedly deteriorated for a second straight month to its lowest in over a year.

That dented momentum in retailers and took some of the shine off gains in miners, which rose after data in China showed economic growth accelerated for the first time in two years in December.

The media sector outperformed however on Friday, boosted after Berenberg raised its target price for Italian firm Mediaset.

"We have had the good China data and reasonable earnings in the U.S. which has been quite supportive. I think the markets can push higher but we are running out of catalysts," Guy Foster, head of portfolio strategy at Brewin Dolphin, said.

European sales closed higher on Thursday as encouraging sales figures from retailers Carrefour and Associated British Foods helped offset losses in the mining sector.

The pan-European FTSEurofirst 300 Index provisionally closed 0.4 percent higher at 1,164.69 points, stuck in the 1 percent range that has trapped it for the past week, as the index consolidated 22-month highs.

Corporate updates were the main driver on Thursday, with AB Foods, owner of discount retailer Primark, and supermarket Carrefour rising 5.5 percent and 3.3 percent, respectively, in brisk volume after they reported reassuring figures for the end of 2012. Belgian supermarket Delhaize released fourth-quarter earnings that were in line with expectations.

The retail sector helped counter a 0.7 percent fall for heavyweight miner Rio Tinto, which recorded a $14 billion writedown.

"Investors are starting to judge stocks based on their fundamentals, as opposed to macro factors," Mark Buchanan, director of trading strategy at Credit Suisse, said.

Rio Tinto also announced that CEO Tom Albanese was stepping down, with Sam Walsh confirmed as his successor.

Anglo American also showed losses on news that operations had to be stopped on Tuesday night at a platinum mine in South Africa; Exane BNP downgraded their outlook on the firm from neutral to underperform.

European shares ended mostly flat on Wednesday, bouncing off intraday lows as many investors used the early dip to boost their exposure to equities, with mining shares the main drag.

The FTSEurofirst 300 Index index of top European shares unofficially closed 0.01 percent higher at 1,160.36 points, after losing as much as 0.5 percent earlier in the session.

The benchmark index - which is already up 2.3 percent so far this year and has hit a near-two-month high earlier this month - has surged 8.8 percent since mid-November as fading fears of a break-up of the euro zone prompted investors to scoop up the region's equities.

"Europe's catch-up rally is set to continue," said Roland Kaloyan, strategist, global asset allocation, at Societe Generale CIB.

"There is no reason to switch out now. Markets are flooded with liquidity, low volatility levels are supporting inflows, and valuations are still attractive."

Mining shares were among the day's losers, falling along with metal prices as investors remain cautious over China's economic outlook. Rio Tinto fell 0.9 percent and Vedanta Resources dropped 1.4 percent.

Banking stocks reduced their losses following good earnings by Wall Street firms Goldman Sachs and JPMorgan. The European banking sector closed 0.42 percent lower at 175.62 points.

Technology stocks fell to push European shares lower and send Germany's benchmark DAX index to a 2013 low on Tuesday after weak results from software company SAP.

The pan-European FTSEurofirst 300 Index provisionally closed down 0.1 percent at 1,159.14 points, while the euro zone's blue-chip Euro STOXX 50 index fell 0.5 percent to 2,700.52 points.

SAP fell 4.1 percent after posting below forecast revenues, contributing to a 0.8 percent DAX fall to 7,669.38 points. It had earlier hit a 2013 low of 7,635.88 points.

SAP's decline took the most points off the FTSEurofirst 300 index and hit the STOXX Europe 600 technology index, which fell 2.1 percent to make it the region's worst-performing equity sector.

"Especially after their main competitor Oracle managed to beat estimates last month, many had hoped that SAP would follow suit," said Markus Huber at ETX Capital.

Meanwhile, shares in Arm, the mobile chip firm, closed sharply lower, following a fall in Apple's stock in the U.S., after reports of low demand for its new iPhone 5.

European equities stalled on Friday, with weak economic data from the United States and concerns about the scope for more stimulus in China giving investors the excuse to lock in profits on a new year rally to multi-month highs.

The U.S. trade deficit unexpectedly grew in November, suggesting that fourth quarter gross domestic product (GDP) growth in the world's biggest economy would likely be lower than previously expected.

The FTSEurofirst 300 Index provisionally closed 0.2 percent lower at 1,162.70 points, retreating from Thursday's two-year peak of 1,170.29.

"We got some fantastic returns in the early days of this year. If we look at valuation and momentum indicator it seems like this rally is reaching the ceiling. Looking at the earnings season, we think there is more downside risk than upside risk on earnings," Peter Garnry, strategist at Saxo Bank, said.

"If you take a tactical position around this, you would either underweight European equities or sell out. If you are really aggressive you could go short, and the DAX could be a good way to do that."

European shares closed narrowly mixed after the European Central Bank and the Bank of England left interest rates unchanged Thursday, while a better-than-expected trade report from China provided some support for investor sentiment.

Rallying telecom stocks and a bullish start to the new earnings season propelled Europe's top shares to fresh 22-month closing highs on Wednesday.

The STOXX Europe 600 telecoms index rose 2.7 percent, the top sectoral gainer, with traders citing a Financial Times report saying top telecommunication firms were discussing a pan-European infrastructure network to unite Europe's disjointed national markets as a reason for the rise.

The FTSEurofirst 300 Index provisionally closed up 7.76 points, or 0.7 percent, at 1,167.96, also lifted by a bullish start to the U.S. earnings season after aluminium giant Alcoa's in-line profits and above-consensus revenues.

Equities are being lifted by the apparent reduction in risk posed to the macro economy from the euro zone debt crisis and budget issues in the United States.

"It has been a good start to 2013 and equity investors have been buying into the idea that we have negotiated the worst case scenario," said William De Vijlder, chief investment officer for strategy & partners at BNP Paribas Investment Partners.

The STOXX Europe 600 banking index, up 2.26 percent, was the second-biggest sectoral gainer, with Lloyds Banking Group rising sharply, helped by a rating upgrade by UBS.

According to Thomson Reuters Datastream, European banks traded on 9 times their one-year forward earnings, against a 10-year average of 9.7 times and below 11.4 times for the pan-European STOXX Europe 600 index.

Earnings Outlook

According to consensus estimates, European earnings were still expected to rise about 9 percent in 2013, despite a downward revision in the past couple of months, analysts said.

"Expectations are quite low going into the earnings season as we saw a lot of downward guidance in the past few months. There is potential for an upside surprise to come through," Robert Parkes, equity strategist at HSBC Securities, said.

"We think earnings will grow by about 6 percent in Europe this year. We have got some topline growth coming through and a little bit of margin expansions," he said, adding his forecast was slightly below consensus.

Thomson Reuters StarMine data showed the fourth quarter earnings could even be 0.9 percent above analysts' forecasts.

European shares dipped on Tuesday, tracking losses on Wall Street and with a key blue-chip index halted by a major resistance level, as investors braced for sluggish corporate results in the upcoming earnings season.

The FTSEurofirst 300 index of top European shares provisionally closed 0.1 percent lower at 1,160.45 points, drifting lower along with U.S. indexes.

The euro zone's blue chip Euro STOXX 50 index also fell 0.1 percent, to 2,691.73 points.

After a sharp rally started in mid-November, the benchmark index has been halted for a week by a key resistance level at 2,709 points, representing the starting point of a near 30 percent nosedive in mid-2011.

"Charts show some hesitation at major resistances, so it doesn't look too good on the short term," said Philippe de Vandiere, analyst at Altedia Investment Consulting.

"Earnings are not going to be good, with a lot of company results hit by restructuring. We already know it will be grim, so the focus will be on the outlook, basically any comment about visibility, which seems to be nil at the moment."

Despite the overall market's dip on Tuesday, euro zone banking stocks extended their recent rally sparked by news that global bank liquidity rules will be eased, with Banco Popolare up 3.6 percent and Societe Generale up 3.2 percent.

European shares fell for the first time in 2013 on Monday, with utilities leading a broad retreat after a gloomy sector note from Deutsche Bank.