European markets dipped into the red Friday as investors became increasingly concerned of a global economic slowdown after a poor week of data was punctuated by a grim housing and manufacturing figures from the United States.

Shares found further pressure form the anticipated review of 17 of the world's biggest banks by Moody's Investors Service, which cut the ratings of 15 of them – 10 in Europe – after a four-month analysis. Market reaction was mixed, however, as none of the downgrades were more severe than analysts had been anticipating.

We're seeing some relief in Spanish stocks today, however, after the release late Thursday of a much-anticipated audit of the country's banking sector by private consultants Oliver Wyman and Roland Berger. Under a "worst case" scenario of a 6.5 percent decline in GDP and a further 25 percent fall in house prices, banks would need an extra €62bn in capital, the Oliver Wyman portion of the study reported - much less than the €100bn negotiated with the EU. Spain now has until Monday to formally request the funds.

Elsewhere German business confidence fell to a two-year low, according to the Munich-based Ifo Institute and consumer confidence in Italy hit a record low for June as households faced the first payments of an unpopular property tax known as the IMU.