Investors are processing declining U.K. retail sales before the release of eurozone inflation data, which caused European stock markets to begin lower on Friday.

Worries over China's economic slowdown and the possibility of increased interest rates from the Federal Reserve are mostly to blame for the major European indexes' projected losses of 1% to 2% this week.

Investors are processing declining U.K. retail sales before the release of eurozone inflation data, which caused European stock markets to begin lower on Friday and enter the final session of the week on a gloomy note.

However, the forecast for the rest of Europe is also cause for concern because inflation is still running at high rates and because growth is finding it difficult to demonstrate any upside.

According to figures released on Friday, U.K. retail sales dropped 3.2% annually and 1.2% on a monthly basis in July as customers struggled with high costs that precluded them from spending on discretionary products.

British annual inflation for July was 6.8%, down from 7.9% in June but still much higher than the Bank of England's medium-term objective of 2%.

Later in the afternoon, fresh information on inflation is expected from Europe. The monthly CPI for the eurozone is predicted to have decreased by 0.1% from June to July, for an annual rate of 5.3%.

President of the European Central Bank Christine Lagarde signaled that the bank will halt its more than year-long rate-hike campaign in September, but one more increase by year's end is still anticipated due to the high pace of inflation.

Although oil prices were steady on Friday, they appear to be ending a seven-week winning run due to worries about China's weakening economy, the world's largest consumer of crude oil, as well as the possibility of increasing Federal Reserve interest rates.

On Thursday, crude prices showed some momentum, recovering from a two-week low after China's central bank declared it will maintain markets liquid to support economic development.

However, following protracted supply cutbacks by major producers Saudi Arabia and Russia, both futures were expected to decline by more over 3% this week after rallying for the previous seven weeks.

(Sources: investing.com, reuters.com)