European shares dip as trade caution lingers

European shares edged lower for the second straight session on Friday, as investors feared a new U.S. law backing protesters in Hong Kong would cloud the prospects of a preliminary Sino-U.S. trade deal.

On Thursday, China warned of "firm counter measures" to the law supporting anti-government protesters in Hong Kong. The editor of China's state-backed Global Times tabloid said later in a tweet those could include barring drafters of the legislation from mainland China, Hong Kong, and Macau. The pan-European STOXX 600 index was down 0.4% at 0806 GMT, but still on track for its best week in three after a boost from positive headlines on trade earlier in the week.

Shares of Norway's largest bank DNB fell 3.4% after police said they were investigating to establish whether any laws were broken in its handling of payments from an Icelandic fisheries firm to Namibia. Frankfurt-listed shares dropped 0.4%, as data showed German retail sales dipped in October, suggesting private consumption in Europe's largest economy took a pause before the Christmas shopping season.

Traders are now awaiting a raft of economic indicators including the euro zone unemployment rate for October and preliminary GDP figures for the fourth quarter from Italy.