Germany's DAX index fell 32.90 points, or 0.84%, to 3,862.71 as there was little reaction to a report that an index of German factory-sector activity rose to 56.5 in July from 55.0 in June. DaimlerChrysler, Volkswagen, and Bayerische Motoren Werke were lower on worries about high energy prices. Deutsche Bank was lower after Merrill Lynch lowered its estimates for this year and next.
In Paris, the CAC 40 index lost 23.31 points, or 0.64%, to 3,623.79 on the U.S. terror alert and on news that a French manufacturing index fell to 54.6 in July from 55.8. Business Objects was lower; after the largest shareholder sold 6% stake in company. Euro Disney was lower after lenders delayed a decision on refinancing for the theme park operator.
Asian markets finished lower on Friday. Japan's Nikkei 225 index dropped 103.54 points, or 0.91%, to close at 11,222.24, led lower by exporters on worries over U.S. economic outlook and weakened sentiment after the U.S. raised the security alert level to high for certain financial institutions on Sunday as intelligence suggested a possible threat. Toyota Motor fell 1.1% while Sony edged down 0.5%. But shares of Japan's No. 3 shipping line Kawasaki Kisen surged after it raised its full-year net income forecast. Mitsui O.S.K. Lines leapt 5.2% after Goldman Sachs upgraded the stock to outperform.
In Hong Kong, the Hang Seng index eased 36.34 points, or 0.30%, to close at 12,201.39, with Bank of East Asia tumbling after it reported weaker-than-expected earnings on Friday. China carmaker Brilliance also sank after local media reported that four executives had resigned. HSBC traded almost flat ahead of its first half earnings report.
Canada's benchmark S&P/TSX rose 14.88 points, or 0.18%, to 8,458.07.