Losses in most sectors pushed the STOXX 600 index down 0.2 percent and Germany's DAX index fell 0.4 percent after data added to signs that Europe's largest economy started the second quarter on a weak footing.
"It looks that the slowdown in Europe is something more serious than previously thought," said Giuseppe Sersale, a portfolio manager at Anthilia in Milan.
He said prospects for European equities were not particularly bright given the weakening economy and the possibility the ECB could debate whether to gradually unwind bond purchases.
Trade war fears also weighed as U.S. President Donald Trump lashed out at Canada and the European Union, setting the tone for a hostile Group of Seven summit.
"Investors remain on high alert, however, for any sign that this weekend’s G7 meeting will develop into an acrimonious slanging match", said Chris Beauchamp, Chief Market Analyst at IG.
Italy's FTSE MIB fell 1.9 percent as unease about the new government's spending plans put fresh pressure on the Italian government bonds and the governor of the Bank of Italy warned the country risked "falling off a cliff" if it didn't carefully manage public spending.
Italian banks, which have a big sovereign debt exposure, slumped 2 percent.
"Italian turbulence is a problem but the ECB appears to be ignoring it and willing to go ahead with policy normalisation ... It's a bit risky," said Anthilia's Sersale.
Elsewhere in the banking sector, Deutsche Bank fell 0.7 percent and Commerzbank dropped 1.6 percent.
Deutsche Bank downplayed the idea that a deal with its German rival Commerzbank could materialise soon, after Bloomberg reported that top shareholders had been consulted about a potential tie-up.
Among winners, shares in British satellite firm Inmarsat surged 13.4 percent on Friday with traders pointing to takeover speculation on the Financial Times' Alphaville blog.
Still in London, Auto Trader jumped 8.3 percent for a second session of strong gains after its full year results and broker upgrades.
Kering was also a bright spot, up 5.6 percent as several price target upgrades helped shares in the luxury group recover from a heavy drop suffered on Thursday on worries that margins and growth in the sector may have peaked.
At an investor day on Thursday Kering said it aimed to reach 10 billion euros in annual sales for its key Gucci brand.
"Kering remains our top pick in the luxury goods sector as we believe there is much more to the story than just Gucci, thanks to the growth opportunities of smaller brands and M&A potential," said Berenberg analysts said in a note.
(Reporting by Danilo Masoni; Editing by Catherine Evans)
By Danilo Masoni and Julien Ponthus