There is unease that US president-elect Donald Trump's planned tax cuts and import tariffs will rekindle inflation in the United States and beyond, which could in turn see the Federal Reserve scale back on interest-rate cuts.
Europe's main stock markets lost almost one percent around midday, despite Wall Street striking fresh record highs Thursday after the Fed trimmed US borrowing costs by 25 basis points.
The dollar traded mixed against main rivals Friday.
"(Fed) news which ordinarily would have drawn a lot of the market's focus has been pushed down the agenda as attention is turned to the implications of Donald Trump's return to the White House," noted Russ Mould, investment director at AJ Bell trading group.
Chinese stocks ended lower Friday ahead of fresh announcements aimed at stimulating China's struggling economy.
China unveiled some of its most ambitious plans in years to lift local government debt following a meeting of lawmakers eyeing the possibility of intensified trade tensions with Trump.
Chinese media said officials in Beijing would raise the debt ceiling for local governments by $840 billion.
"The market reaction shows that traders do not see these measures as boosting consumption, and instead they are designed to stop a financial crisis domestically in China," concluded Kathleen Brooks, research director at traders XTB.
China broadcaster CCTV described the move as the country's "most powerful debt reduction measure in recent years", adding it would free "up space for local governments to better develop the economy and protect people's livelihood".
It came amid uncertainty about the outlook for China after the election of Trump, who warned during his campaign that he would hit imports from the country with huge tariffs of up to 60 percent.
"On balance, it is likely that Trump's electoral victory presents additional downward pressure to China's growth in the next few years (depending on various policy responses in both the US and China)," said National Australia Bank's Gerard Burg.
- Key figures around 1130 GMT -
London - FTSE 100: DOWN 0.9 percent at 8,064.58 points
Paris - CAC 40: DOWN 0.9 percent at 7,356.75
Frankfurt - DAX: DOWN 0.9 percent at 19,193.31
Tokyo - Nikkei 225: UP 0.3 percent at 39,500.37 (close)
Hong Kong - Hang Seng Index: DOWN 1.1 percent at 20,728.19 (close)
Shanghai - Composite: DOWN 0.5 percent at 3,452.30 (close)
New York - Dow: FLAT at 43,729.34 (close)
Euro/dollar: DOWN at $1.0795 from $1.0801 on Thursday
Pound/dollar: DOWN at $1.2973 from $1.2985
Dollar/yen: DOWN at 152.31 yen from 152.92 yen
Euro/pound: UP at 83.20 pence from 83.18 pence
West Texas Intermediate: DOWN 1.1 percent at $71.56 per barrel
Brent North Sea Crude: DOWN 0.9 percent at $74.95 per barrel
dan-bcp/lth
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