Morning MoneyBeat Europe: Stocks Dragged Lower by China's Weakness

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Down went the Shanghai Composite. And with it, Europe's rally this week came to a halt.

China shares tumbled more than 5% as authorities investigated major brokerages and industrial profits fell.

The downbeat sentiment weighed on European shares immediately, with losses led by the basic resources sector. The Stoxx Europe 600 was last down 0.4% after hitting a three-month high on Thursday.

Still, investors in Europe may not have long to worry about weakness in China with the European Central Bank due to meet next week.

"Despite all the economic worries from China, and geopolitical worries in Europe and elsewhere, I think the central bank is still very much the most important driver of the market," said Philippe Gijsels, chief strategist at BNP Paribas Fortis.

Expectations have grown for aggressive stimulus from the ECB, and further easing of policy is expected to be a boon for stock markets. "Everyone is counting on Draghi to pull the same stunt [as last year]," Mr. Gijsels said. "If Mr. Draghi wants the market to go up [next week], it will."

Meanwhile, U.S. markets reopen from a Thanksgiving holiday later Friday, but will close early in what is expected to be thin trade.

Focus as ever remains on the Federal Reserve, with the nonfarm payrolls report due next week as investors gauge the course for U.S. interest rates in December and beyond.

Watch for: U.K. second estimate GDP, business sentiment, services index; eurozone business climate and economic sentiment, consumer confidence; German GfK consumer climate, import prices; French household consumption, Spain HCPI.

Market Snapshot: FTSE 100 down 0.42%, CAC 40 down 0.41% and DAX down 0.23%. Nikkei closed down 0.30% Friday. Brent crude down 0.99% at $45.01. Gold down 0384% at $1068. EUR/USD at $1.0606. Ten-year Treasury yield lower at 2.209%, Bund yield lower at 0.458%, Gilt yield lower at 1.834%.

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