European Stocks Close Mixed; Markets Await Rates News

European stocks closed the week mixed as euphoria over lower-than-expected U.S. inflation data waned, and investors began looking ahead to next week's interest rate decisions from the European Central Bank and Bank of England.

The major European indexes extended losses early in the session, as a surprise surge in euro-zone inflation and weaker-than-expected retail sales figures from Germany added to concerns over the financial sector.

Shares regained some ground in early afternoon after U.S. inflation data came out. U.S. stocks opened largely flat as the dollar held near a record low against the euro.

The London FTSE-100 and Paris CAC-40 were lower, while the Frankfurt DAX inched into the green. The FTSE CNBC Global 300 was flat.

The FTSE, the CAC and the DAX ended the quarter in the red, while the FTSE CNBC Global 300 finished on the upside.

New York light sweet crude slid below $83 a barrel but remained within reach of all-time highs.

Corporate Warnings

In corporate news, troubled German lender IKB Deutsche Industriebank warned investors it could lose $1 billion this year due to exposure to U.S. suprime mortgages. Shares of IKB, which have lost nearly half their value in the past three months and continued to decline at the open, closed higher by 0.65%.

U.K. sugar maker Tate & Lyle also warned that higher corn costs, a corn gluten export ban and a weaker dollar would hit profits. Shares of Tate & Lyle plunged nearly 28%.

"It doesn't look like there's much of a relief in the short term, so probably that's why the stock was sold so much," Simon Denham from Capital Spreads told "Worldwide Exchange."

And the tight credit conditions continued to cause problems for the U.K.'s Northern Rock as the battered mortgage lender borrowed a further $10 billion from the Bank of England's penalty facility, the Financial Times reported Thursday. Shares closed 7.5% lower.

Meanwhile, Alcatel-Lucent's board of directors delivered an ultimatum to its chief executive Patricia Russo, demanding the telecom boss produce an emergency restructuring plan within a month, the Financial Times reported on Friday. Shares gained 3.6%.

Staying in the telecom sector, France Telecom agreed to sell its Orange Netherlands unit to Deutsche Telekom in a deal worth 1.3 billion euros ($2.7 billion). Shares of France Telecom were 0.5% higher and Deutsche Telekom rose 0.3%.

Next week looks busy for European investors, with both the European Central Bank and the Bank of England holding rate-setting meetings. Economists predict that both banks will keep rates flat as the financial turmoil has not yet ended.

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