World stocks slid Friday, with the focus in Europe on British Prime Minister David Cameron seeking to put together a last-gasp deal to persuade Britons of their EU future.
As Cameron admitted there was "still no deal" coming towards the end of a second full day of negotiations in Brussels aimed at preventing a British exit from the European Union, continued oil price weakness also weighed on markets, which lost moderate ground.
London's FTSE 100 (NasdaqGS: Z - news) index of top companies and Paris' CAC 40 both shed 0.4 percent at the close while the Frankfurt DAX fell 0.8 percent.
Asia's stocks rally fizzled out amid a fresh weakening in oil prices and haven assets such as the yen received a boost.
Dealers shrugged off upbeat data showing that British retail sales rallied 2.3 percent last month compared with December -- the biggest increase in more than two years.
Wall Street was off in early trade as oil prices retreated and US inflation data boosted the odds of another Federal Reserve interest rate hike this year.
US Labor Department data showed flat US consumer prices in January, but a pickup of 0.3 percent in core inflation when volatile food and energy prices were stripped out.
That led Capital Economics to indicate that "if we are right, the Fed will find it increasingly hard to ignore evidence that core inflation is accelerating."
Two hours into trade, the Dow Jones Industrial Average was at 16,375.18, down 0.2 percent, while the broad-based S&P 500 was off 0.3 percent but the tech-rich Nasdaq Composite Index overturned early lossed to add 0.4 percent.
- 'Adventures in Brussels' -
"After flitting about for much of the morning the European indices gradually began to look worse and worse, ignoring largely positive data ... to instead focus on David Cameron's adventures in Brussels," said Spreadex analyst Connor Campbell.
Cameron is seeking to reach a deal on reducing welfare payments to EU migrants and opting out of a commitment to ever-closer union.
The British premier wants sweeping reforms to the 28-member bloc which he hopes will stop Britain from becoming the first nation to leave the EU in a membership referendum likely in June.
He has however hit opposition from France and Belgium over his bid to make clear Britain is not committed to ever-closer union and ensure that the City of London (LSE: CIN.L - news) financial district is not bound by rules governing the euro single currency area.
"Despite this strong (retail) data, the focus today will remain firmly on the EU leaders' summit in Brussels," added ING economist James Smith, who warned that a looming referendum would create a climate of "uncertainty" that could adversely affect investment.
"If the UK is able to agree a deal, the press is reporting that David Cameron could return to London tonight and announce the referendum date, which will most likely be set to take place on June 23.
"This will essentially mark the formal start of campaigning and with the polls likely to remain tight, we could see a loss of economic momentum over the next couple of quarters as uncertainty prompts firms to temporarily hold off on hiring and investment plans."
- 'Pound to remain depressed' -
The British pound fell to $1.4313 from $1.4335 late on Thursday, but steadied against the euro.
"The pound is likely to remain depressed until there is a some movement in Brexit negotiations; for the good or the bad," noted CMC Markets analyst Jasper Lawler.
Equities were also depressed on Friday by Thursday's falls on Wall Street.
Tokyo ended the day down 1.42 percent as a stronger yen dented exporters and the fresh fall in oil hammered commodity and energy shares.
World oil (Other OTC: WOIIF - news) prices shed about 60 cents in midday London deals on Friday, with New York crude sitting just above $30 per barrel.
Analysts noted the strengthening yen could weigh on the profitability of Japanese exporters.
Elsewhere in Asia-Pacific, Hong Kong closed down 0.4 percent while Sydney dropped 0.79 percent, but Seoul rose 0.39 percent.
In Shanghai stocks were broadly flat, slipping 0.10 percent amid persistent worries over the flagging economy, dealers said.
- Key figures around 1700 GMT -
London - FTSE 100: DOWN 0.4 percent at 5,950.2 points (close)
Frankfurt - DAX 30: DOWN 0.8 percent at 9,388.8 (close)
Paris - CAC 40: DOWN 0.4 percent at 4,223.0 (close)
EURO STOXX 50: DOWN 1.3 percent at 2,856.6
Tokyo - Nikkei 225: DOWN 1.42 percent at 15,967.17 (close)
Shanghai - composite: DOWN 0.10 percent at 2,860.02 (close)
Hong Kong - Hang Seng: DOWN 0.4 percent at 19,285.5 (close)
New York - Dow: DOWN 0.2 percent at 16,386.4
Euro/dollar: DOWN at $1.1099 from $1.1105 on Thursday
Dollar/yen: DOWN at 112.88 yen from 113.24 yen