European Stocks to Open Lower; Debt Fears Resurface

European shares are expected to retreat on Friday after gains in the previous two sessions, with persistent concerns about euro zone debt problems and Chinese inflation seen putting pressure on the market.

Sharon Lorimer

European shares ended higher on Thursday, with heavyweight mining shares boosted by rising metals prices and bid interest in Capital Shopping Centres lifting the real estate sector.

Investors kept pressure on Portugal and Spain Thursday, as fears that they could be the European debt crisis' next victims pushed borrowing costs near record levels.

"Portugal is a small hiccup in comparison to the broken arm of Ireland," Ralph Silva, director of Silva Research Network told CNBC.

Ireland voters went to the polls in the northwestern county of Donegal on Thursday, just a dau after the country unveiled a set of austerity measures.

Separately, the Irish Times reported Thursday Ireland may create a second bad bank to cleanse other banks.

Friday will see a final vote in Portugal's parliament on the budget bill, after the government of Prime Minister Jose Socrates and the opposition Social Democrats agreed on a package to deal with the country's deficit cleared its first hurdle earlier this month.

German Chancellor Angela Merkel and French President Nicolas Sarkozy discussed the debt crisis late on Thursday.

The European Central Bank is set to release October data on M3 money supply, a measure of cash readily available to spend which the European Central Bank sees as a leading indicator for inflation.

In the UK, the Land Registry releases its October house price index.

Retailers will be in focus in the US as the US Christmas shopping season kicks off on Black Friday, the Friday after Thanksgiving when retailers offer big savings to entice shoppers.