European stock markets closed in negative territory on Friday ahead of German elections this weekend and as traders continued to track developments surrounding China's embattled property company, Evergrande.
The French CAC 40 and the Swiss Market Index were down 1% each, the German DAX closed down 0.7%, and the UK's FTSE 100 fell 0.4%. The Stoxx Europe 600 declined 0.9%.
Markets will be watching German federal elections on Sunday. Business expectations in the country fell to 97.3 points in September from 97.8 in August, marking the third consecutive monthly decline, according to Ifo Institute data published.
European Central Bank President Christine Lagarde told CNBC Thursday that the continent's direct exposure to Evergrande should be "limited." There are concerns that a potential Evergrande default could threaten markets beyond China.
Britain's GfK consumer confidence index dropped to -13 in September from -8 in August, driven by rising prices and headline inflation, tax hikes, empty shelves, as well as the end of the furlough scheme, according to a release. The latest reading missed the estimate of the index maintaining the -8 level.
The UK government is considering the implementation of legislative reforms to its financial rules following criticism from a report into the collapse of Greensill Capital, according to media reports, which cited a letter. According to Chancellor Rishi Sunak, the Treasury may implement reforms to tighten the oversight of appointed representatives in order to "prevent opportunities for abuse of the system." Meanwhile, the government may also bring reforms to the change in control rules in order to keep banks away from owners who would not be given banking licenses in their own right.
Banks and asset managers at UK Finance are backing the finance ministry's proposal to remove its share trading obligation to increase competition among firms, Reuters reported, citing a statement from the trade association. Following a review of Britain's capital markets after Brexit, the finance ministry put forward its recommendation to remove the share trading obligation which enforces market participants to use specific venues, such as stock exchanges, for trading.
European Union member states remain divided and have yet to set climate change targets for the bloc to present at the COP26 climate change conference in November, Reuters reported, citing EU officials and documents. The 27 member states, which must unanimously approve the EU's stand, have not decided whether to set five-year or 10-year timeframes for the climate goals. Most countries, including France, Denmark, the Netherlands, Spain and Luxembourg, support five-year goals, while countries including Poland, Romania and Bulgaria want to allow countries to select the timeframes to meet targets.
On the corporate front, Petrofac (PFC.L) was up 26% after the company signed an agreement with the UK Serious Fraud Office and plans to plead guilty over seven counts of failing to prevent its employees from bribing agents in relations to projects in Iraq, Saudi Arabia and the UAE. The issues related to project were won between 2012 and 2015. The regulatory body will determine the penalty for the company on Sept. 27. The employees facing the charges have left the business, Petrofac said.