European shares closed sharply lower on Friday, with investor sentiment knocked by worries about Cyprus's bailout and disappointing U.S. retail data.
The pan-European FTSEurofirst 300 Index closed provisionally down 1 percent at 1,181.49 after U.S. data showed retail and food sales fell by 0.4 percent in March, worse than the expected fall of 01. percent.
(Read More: Shoppers Stay Home Even With Cheaper Gas Prices)
European shares were already in negative territory before the data release, due to concerns about how Cyprus will be able to plug the 6 billion euro ($7.8 billion) funding gap in its bailout package.
"People are realizing the Cypriot bailout is not a done deal at all, and that is pouring cold water on risk appetite seen earlier in the week," Christian Jimenez, president of Diamant Bleu Gestion, told Reuters on Friday.
(Read More: Confusion Over Cyprus' Bailout Funding Grows)
Euro zone finance ministers also agreed on Friday to give Ireland and Portugal extensions on their bailout loan repayments.
Shares were boosted briefly on Friday when February industrial production numbers for the euro zone came in better-than-expected. Factory output data showed a rise of 0.4 percent for February, higher than the 0.1 percent gain forecast in a Reuters poll.
In other European news, Russia's economy ministry cut the country's growth forecast for 2013 by a third to 2.4 percent, which would be the lowest GDP increase since 2009. The government revised its estimate downwards due to weaker-than-expected consumer demand, investments and exports in the first quarter, Reuters reported.
In addition, DE Master Blenders, the Dutch owner of Douwe Egberts coffee, announced it is to be purchased by German investor Joh A Benckiser (JAB) for 7.5 billion euros ($9.8 billion). The deal will create a hot drinks empire aimed at taking on market leaders Nestle and Mondelez.
Across the Atlantic, financial giants JPMorgan Chase and Wells Fargo both reported earnings that beat analysts' estimates. However, shares in both companies fell amid weaker internals, including a revenue miss from Wells Fargo.