The Dow Jones Stoxx 600 Index lost 0.5% to 362.45 in London. The Stoxx 50 also slid 0.5% , and the Euro Stoxx 50, a measure for the 12 nations sharing the euro, declined 0.9%. Trading was less than average as UK and Irish markets closed early before Christmas.

Stocks had their first decline in three weeks after reports suggested further cooling in the world's largest economy. A record wave of takeovers and earnings that topped analysts' estimates have helped investors shrug off concerns that global growth is slowing, sending the Stoxx 600 toward its second straight quarterly gain.

"European markets have been slipping all week as it's been a good quarter and people want to lock in some gains, " said Michael Hughes, who helps manage $38bn at Baring Asset Management in London. "Investors will keep a close eye on economic data due later."

National benchmarks fell in 14 of the 18 western European markets.

Germany's DAX dropped 1.1% and France's CAC 40 lost 1%. Britain's FTSE 100 closed up 0.1%.

About half the dollar amount of shares changed hands on Friday in the three main markets compared with the daily average of the past three months, based on data compiled by Bloomberg. The Stoxx 600, which has rallied 17% this year, was down 1% last week.

Last week the Federal Bank of Philadelphia's general economic index sank to minus 4.3 from 5.1 in November, signalling business was weakening.

The economy of Europe's largest trading partner grew at a 2% annual rate in the third quarter, less than the 2.2% estimated last month, the US commerce department said last week.

China's economy may expand 9.8% in 2007, which is slower than the previous forecast of 10%, a report by the Chinese central bank said on Friday. In London, copper gained again, rebounding from an eightmonth low.

Shares of Vodafone lost 1.2% to 142 pence after the company said it may make an offer for "a controlling interest" in Hutchison Essar.

The process is "at an early stage" and may not lead to a transaction, Vodafone said on Friday.

Vodafone may face competing bids for the company, India's fourthbiggest wireless operator and a unit of billionaire Li Ka-shing's Hutchison Telecommunications International. Blackstone Group and Reliance Communications, India's second-largest mobile phone company, asked banks led by Citigroup and UBS to lend almost $15bn to fund a buyout of Hutchison Essar.

Premier Foods fell 5.3% to 300 pence. The UK food company that's acquiring competitor RHM said annual sales will be at the lower end of its forecast after consumers bought fewer of the soups, pastas and vegetable goods that it turns out for food retailers under the grocers' own brands. Shares of RHM sank 3.9% to 380 pence.