European shares fell on Friday, leading them to post a second straight week of losses, as worries about the stability of Italy's government rattled investors and concerns about Sino-US trade tensions lingered.

Milan's FTMIB index tumbled 1.6 per cent, with Italian banks hardest hit after the leader of the ruling League party, Matteo Salvini, pulled his support for the country's governing coalition on Thursday.

Markets have recently been sensitive to political developments in Rome, with Italian bond yields jumping each time there were doubts about the soundness of the government.

The pan-European STOXX 600 index fell 0.2 per cent after recording its best day in almost two months on Thursday, following upbeat trade data from China and a steadying of its currency.

Also weighing on risk appetite was a Bloomberg report, which said that Washington is delaying a decision about licenses for US firms to restart trade with Huawei Technologies, making investors nervous about a ramp-up of bickering in the ongoing trade dispute.

Helping to limit losses on the benchmark was the healthcare sector, boosted by Novo Nordisk, which beat quarterly operating profit forecasts and raised its 2019 sales outlook.

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