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Europe ends lower after euro zone deflation deepens

European equities closed lower on Friday, with investors reacting to earnings and euro zone inflation and unemployment reports

The pan-European Euro Stoxx 600 Index ended around 0.5 percent lower, having started the day in positive territory. Stocks pared gains after official statistics showed the euro zone slid further into deflation in January.

Prices fell by 0.6 percent year-on-year in January, below the 0.5-percent slide forecast by analysts polled by Reuters, and worse than December's 0.2 percent price fall.

The Euro Stoxx 600 ends the month 7.2 percent higher, however, boosted after the European Central Bank announced a new bond-buying program earlier in January.


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FTSE
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IBEX 35
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In the U.K. on Friday, the FTSE 100 closed around 0.7 percent lower on the day, pressured as BT fell 2.6 percent when the telecoms firm announced it would pay off itspension deficit.

However, U.K.mining giants rallied, with Fresnillo and Randgold surging over 4 percent, while BHP Billiton and Anglo American also posted healthy gains.

The French benchmark CAC 40 finished unofficially 0.7 percent lower, while the DAX provisionally ended 0.5 lower.

Greek stocks remained under pressure Friday, closing around 1.6 percent lower after Greece's government will not cooperate with the EU and IMF mission bankrolling the country and will not seek an extension to the bailout program, its finance minister said on Friday.

In terms of data, Eurostat announced that seasonally-adjusted unemployment in the single currency zone fell to 11.4 percent in December. This was down from 11.5 percent in November and was the lowest rate recorded in the region since mid-2012.

In addition, Spanish preliminary growth figures showed a 2 percent rise in the fourth quarter of last year, compared to the same period in 2013.

U.S. stocks fell sharply on Friday, with equities on track for January losses, with investors on uncertain footing after the government reported economic growth slowed sharply in the fourth quarter.

The Commerce Department reported gross domestic product expanded at a 2.6 percent annual rate after the third quarter's 5 percent jaw-dripping pace. Analysts had projected the economy would expand at a 3 percent rate in the final quarter of 2014.

Russia cuts rates

Meanwhile, Russia's central bank cut its key interest rate to 15 percent on Friday, just one month after a surprise hike, amid calls from government officials and business leaders for a cut to stimulate growth in the country's sanctions-hit economy.

The European Union extended existing sanctions against Russia on Thursday. The ministers held off on tougher economic sanctions and gained the support of the new left-leaning government of Greece, whose backing had been in doubt, according to Reuters.

The EU also extended until September travel bans and asset freezes that had been due to expire, Reuters said.

—CNBC's Katy Barnato contributed to this article.