Investors are avoiding European stocks because of the gloomy economic outlook.

Dax and EuroStoxx50 each fell about one percent on Friday to 12,402 and 3388 points.

"The fact that at least Europe is entering a recession phase is now only doubted by very few," said analyst Jens Herdack from Weberbank.

Since the domestic economy is suffering both from the rate hikes by the central banks and from the energy crisis triggered by the Ukraine war, the downturn is likely to be more pronounced than in the USA.

The economic pessimists saw themselves confirmed by the German purchasing manager indices, which showed that the German economy contracted surprisingly sharply in September.

In the euro zone, business was as bad as it was more than a year and a half ago.

The euro continued its slide, hitting another 20-year low at $0.9753.

"Obviously, the majority on the floor doesn't believe that the European Central Bank can keep up with the fast pace of tightening by the US Federal Reserve," said portfolio manager Thomas Altmann from investment advisor QC Partners.

Italy election casts shadows ahead

Another stress factor is the upcoming parliamentary elections in Italy, Altmann added.

The right-wing electoral alliance, which leads in the polls, is less EU-friendly than previous governments.

Investors should therefore be prepared for price fluctuations, especially in the case of Italian government bonds.

On Friday, however, like their German counterparts, they were in demand as an alternative to shares.

This pushed the 10-year yield down to 4.195 percent.

Investors withdrew from commodities.

Brent crude oil from the North Sea fell by almost two percent to $88.83 per barrel (159 liters).

"With major central banks accelerating rate hikes, the risk of a global recession is overshadowing supply concerns, notwithstanding the recent escalation of the Ukraine war," said analyst Tina Teng of brokerage house CMC Markets.

Industrial metals were also down.

Copper lost 2.3 percent to $7,503 a ton.

Credit Suisse at record low

Hypoport caused a stir on the German stock market with a record price drop of almost 40 percent.

At 89 euros, the shares were as cheap as they were five and a half years ago.

The financial broker had suspended its full-year targets due to weak demand.

The company should no longer aim for double-digit growth rates in sales and operating profit, but instead reduce costs in order to master the current crisis, advised analyst Simon Keller from Bankhaus Hauck Aufhäuser Lampe.

He downgraded the shares to "Sell" from "Hold" and reduced the price target to 70 from 205 euros.

In Zurich, Credit Suisse stocks slipped by up to 8.3 percent and were cheaper than ever at CHF 4.26.

According to insiders, the crisis-ridden bank is exploring the conditions for a capital increase.

Analyst Christian Schmidinger from the Zurich Cantonal Bank put the capital requirement at up to four billion francs (4.2 billion euros).