This is CNBC's live blog covering European markets.

European markets closed lower Friday as investors assess the economic outlook and the potential for further monetary policy tightening from the U.S. Federal Reserve.

The pan-European Stoxx 600 index finished trading down 1%. Most sectors and major bourses closed in the red, with travel and leisure stocks leading losses, down by 3.8%. Oil and gas stocks bucked the trend with a 2.3% uptick, while telecoms stocks were 0.2% higher.

The index closed higher on Thursday with the economic outlook and corporate earnings high on the agenda.

U.K. preliminary fourth-quarter GDP figures on Friday morning showed that the economy flatlined in the fourth quarter to narrowly avoid recession, in line with consensus forecasts. The Bank of England last week projected that the country would enter a shallow but lengthy recession in the first quarter of 2023.

Fed Chair Jerome Powell said earlier this week that although U.S. inflation is easing, rates could still rise, while several Fed speakers reiterated that the hiking cycle could have further to run.

Fed Governor Christopher Waller and Philadelphia Fed President Patrick Harker are both slated to speak on Friday afternoon, Eastern time, and investors will be listening for clues as to the central bank's policy trajectory.

European stocks close lower

Europe's Stoxx 600 closed 1% lower Friday, with the majority of sectors and major bourses in the red.

The U.K.'s FTSE 100 ended the session down 0.3%, at 7882.45 points. France's CAC 40 was down 0.8% and Germany's DAX was 1.4% lower.

— Karen Gilchrist

Stocks on the move: Hellofresh down 11%; Saab up 10%

Shares of fresh food delivery company Hellofresh fell 11.5% in afternoon deals on news that it is to trial its own delivery fleet. It would mark the first such move by a company in the meal-kit segment.

Meantime, Saab rose to the top of the European benchmark, up 10%, after reporting a strong operating profit for the fourth quarter.

— Karen Gilchrist

U.S. stocks open lower

U.S. stocks opened lower Friday with the S&P 500 heading for its worst week in nearly two months following a batch of disappointing quarterly earnings reports.

The broad index shed 0.3% in early trade while the Dow Jones Industrial Average fell 0.2%. The tech-heavy Nasdaq was also down 0.8%.

— Karen Gilchrist

Barclays probed by U.K. regulator over anti-laundering systems, FT reports

Barclays is the subject of a probe conducted by the U.K. Financial Conduct Authority into the British bank's suspected failings in its compliance and anti-money laundering systems, the Financial Times reported on Friday, citing sources with knowledge of the matter.

Barclays and the FCA did not immediately respond to CNBC requests for comment. Barclays shares were down 1.68% by midday London time.

The FCA requested an independent Section 166 review of the lender's systems following concerns over a pattern established by the amount of know-your-customer and AML incidents recorded, the newspaper said. Under Section 166, the FCA is entitled to require a firm to provide a report by a "skilled person" or to appoint such a report provider.

This is not the lender's first FCA challenge. In October, the regulator decided to fine Barclays a total of £50 million in relation to its failure to disclose certain arrangements brokered with Qatari entities as part of its capital raisings announced in June and October 2008. The U.K. Upper Tribunal will determine whether to uphold the FCA decisions.

Barclays is due to announce its full-year annual results on Feb. 15.

- Ruxandra Iordache

Russian central bank holds rates, citing persistent inflation risks

The Central Bank of Russia on Friday left its key interest rate unchanged at 7.5% per annum, citing lingering inflationary risks and stronger-than-expected economic activity trends.

The bank cut rates six times in 2022, taking the key rate from 20% following Russia's invasion of Ukraine in February to 7.5% in September, holding it steady since.

The Bank said current price growth rates were increasing, but "remaining moderate in terms of sustainable components," and that "inflation expectations of households and businesses edged down but remain elevated."

"Economic activity trends evolve better than the Bank of Russia's October forecast. Although households' consumer behavior is still cautious, there appear signs of recovery in consumer activity," the CBR said.

"Accelerating fiscal spending, deteriorating terms of foreign trade and situation in the labor market intensify pro-inflation risks."

The Russian economy is undergoing a structural transformation as the Kremlin looks to minimize the impact of economic sanctions imposed following the invasion of Ukraine.

Given the uncertainties surrounding the economic outlook, the CBR's baseline scenario forecasts GDP growth of between -1% and 1% in 2023 and 0.5% to 2.5% in 2024. These projections are notably higher than consensus among global economists.

— Elliot Smith

First Abu Dhabi Bank not evaluating an offer for Standard Chartered

First Abu Dhabi Bank has dispeled rumors that it is considering an offer for Standard Chartered.

"First Abu Dhabi Bank PJSC notes the recent press speculation in relation to Standard Chartered and re-iterates that it is not evaluating a possible offer for Standard Chartered," a clarification email read.

Standard Chartered shares rose Thursday following a report by Bloomberg suggesting FAB was offering up to $35 billion for the London-listed bank.

— Hannah Ward-Glenton

Adidas shares down 11% after warnings on unwanted Yeezy stock

Shares of Adidas were down 11% around 9 a.m. London time after the company warned of a 1.2 billion euro ($1.3 billion) revenue loss in 2023 if it is unable to sell its existing Yeezy stock.

The German sportswear company said it had already accounted for the "significant adverse impact" of not selling the products and was considering writing off the remaining Yeezy items.

"The numbers speak for themselves. We are currently not performing the way we should," Adidas CEO Bjørn Gulden said in a press release.

Full details of the story can be found here.

— Hannah Ward-Glenton

Stocks on the move: Thule down 15%, Saab up 9%

Shares of Thule Group dropped 15% following the company's fourth-quarter earnings report.

The outdoor equipment conglomerate's net sales dropped 21% in the last quarter, when adjusted for exchange rate fluctuations, while net income amounted to a loss of 16 million Swedish krona ($1.6 million).

The group also announced Mattias Ankarberg would take over as president and CEO no later than Aug. 9.

Saab reported a strong operating profit for the fourth quarter, prompting shares to increase by 9% in early trading.

The Swedish defense company's earnings have been bolstered by the ongoing war in Ukraine encouraging countries to ramp up military spending. Sales increased 16% from the previous quarter while operating income increased 22% to 1.3 billion Swedish krona.

— Hannah Ward-Glenton

Breaking: UK economy flatlines in fourth quarter, narrowly avoiding recession

The U.K. economy posted zero growth for the fourth quarter of 2023, according to preliminary figures from the Office for National Statistics.

In December, however, gross domestic product shrank by a larger-than-expected 0.5% month on month after two months of unexpected growth.

The Bank of England last week forecast that the British economy would enter a shallow five-quarter recession in the first quarter of 2023.

"While the numbers may appear positive for now, overall the economy is flatlining and it is difficult to see that changing in the short-term," said Richard Carter, head of fixed interest research at Quilter Cheviot.

"We are still likely to be in a recession at some point during 2023 – which is still expected to be long and shallow - so these figures do not provide a huge amount of comfort."

— Elliot Smith

Here are the opening calls

Britain's FTSE 100 is set to slip around 23 points lower to 7,888, Germany's DAX is seen around 105 points lower at 15,418 and France's CAC 40 is expected to shed around 23 points to 7,163.

CNBC Pro: Morgan Stanley says EU and U.S. subsidies to boost this global green hydrogen stock that is up 35% this year already

Morgan Stanley has said shares of a green hydrogen producer are expected to rise thanks to the latest set of green subsidies in both the U.S. and Europe.

The investment bank said the company would benefit as green hydrogen is set to become a "key beneficiary" of cleantech stimulus plans on both sides of the Atlantic.

The push for green energy has gained fresh impetus after the U.S. unveiled its $365 billion subsidy program through the Inflation Reduction Act last year. In response, the European Union announced its Green Deal Industrial Plan earlier this year.

CNBC Pro subscribers can read more here.

— Ganesh Rao

CNBC Pro: Emerging markets are getting attention. Morgan Stanley names the 'highest quality' stocks to play it

Emerging markets could be a big winner for investors this year, according to Wall Street analysts. CNBC Pro takes a look at eight of Morgan Stanley's top picks.

Pro subscribers can read more here.

— Zavier Ong