Europe Markets

Europe shares close lower, worst month since August

European market closes lower

European equities closed lower on Friday, as investor sentiment was weakened further by euro zone inflation data that missed expectations..

The pan-European Euro Stoxx 600 Index provisionally closed lower by 0.3 percent, ending the first month of the year with a decline of 1.8 percent. This is the first time the index has closed a month lower since August.

London's FTSE 100 also closed January lower, its first monthly fall since last June, finishing down 3.6 percent.

Euro zone inflation misses

Inflation in the euro zone fell by more than expected in January. Consumer prices rose by 0.7 percent year-on-year in January, according to official statistics released by Eurostat, below the 0.9 percent expected by economists.

(Read more: Deflation worries back as euro zone inflation falls again)

In addition, German retail sales showed a disappointing downtick in December. The monthly figure dropped by 2.5 percent, despite estimates for a rise of 0.2 percent.

French economic data fared slightly better. Consumer spending fell by 0.1 percent in December, beating expectations for a fall of 0.4 percent. Meanwhile, producer prices rose by 0.2 percent in December from the month before.

In stock news, the household goods sector was the standout gainer on European indexes, closing up 1.6 percent.

Shares of LVMH closed the day up by 7.9 percent after the luxury goods firm posted strong results for its fourth quarter. Christian Dior also saw a bounce on the news, with a rise of around 5 percent.

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BT shares rise

In other stocks news, shares of BBVA closed the day up 0.2 percent after it posted a jump in its 2013 profits.

U.K. telecom BT saw its shares climb 3.3 percent after reporting a return to revenue growth for the first time since 2009.

Outside of Europe, U.S. stocks tanked on Friday, with investor sentiment slammed by increasing worries about emerging markets.

"So goes January, so goes the year, goes the saying. Certainly a sell-off is well overdue and the Federal Reserve seems disinclined to back away from a taper. In fact given the effect on U.S. bond yields they could be inclined to taper faster if the uncertainty in emerging markets continues to drive U.S. yields lower," Michael Hewson. the chief market analyst at CMC Markets, said.

Trading volumes in Asia were thin due to the Chinese New Year holidays. Shanghai, Hong Kong and South Korean markets were closed and will resume trade next week.

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