The continent-wide STOXX 600 index was down 0.1%, after climbing 3.6% in the previous two sessions.

Europe's basic resources sector fell 1.6%, a day after surging 5.4% on hopes of further Chinese stimulus. [MET/L]

Globally, sentiment was jolted after former Japanese Prime Minister Shinzo Abe was shot while campaigning for a parliamentary election, driving up bids for the safe-haven yen. [GLOB/MKTS]

Stocks have remained volatile this year as investors debated whether market valuations have turned attractive after a sharp selloff on concerns central banks could trigger a recession with aggressive rate hikes to tame inflation.

Minutes of the European Central Bank's June meeting showed on Thursday that policymakers debated flagging a larger interest rate hike for July, while two of the U.S. Federal Reserve's most vocal hawks supported another 75-basis-point rate increase later this month.

"I certainly don't think that equities in the near term will have much relief especially when you consider how rapidly monetary policy is going to be tightening not just in the U.S, but in Europe as well," said Michael Brown, head of market intelligence at Caxton.

"So in that environment, any rallies that we do see in equities are likely to be relatively short-lived and the seller should come back in pretty short order."

The euro has been sliding towards parity on the dollar as investors fretted about an energy shock in Europe due to its dependence on Russian gas. [FRX/]

Investor focus is now on the upcoming corporate earnings season, which they warned could prompt another sharp fall in global share prices with profit forecasts looking far too upbeat given mounting recession risks.

The U.S. non-farm payrolls report due at 1230 GMT is likely to show that jobs growth slowed in June and unemployment rate unchanged at 3.6%, underscoring a tight labour market.

Among single stocks, TAG Immobilien slumped 12% after the German real estate group said it was raising 200 million euros ($201.80 million) to refinance its latest acquisition in Poland.

Shares of Leonardo gained 5.4% after the Italian defence group in a consortium including Telecom Italia exercised a pre-emption right allowing it to match a rival bid in the tender to set up a national cloud infrastructure.

Supporting the STOXX 500 index, the oil and gas sector tracked crude prices higher to climb 1%. [O/R]

($1 = 0.9911 euros)

(Reporting by Devik Jain in Bengaluru; Editing by Rashmi Aich and Sherry Jacob-Phillips)

By Devik Jain