European stocks were subdued on Friday, with retail shares coming under pressure on fears of a bumpy holiday shopping season due to high inflation and slowing global economic growth.

The pan-European STOXX 600 was flat in light morning trade, holding near three-month highs hit earlier this week. U.S. markets remained closed on Thursday and will have shortened trading hours on Friday on account of Thanksgiving.

Europe's retail index fell 0.3% on Black Friday, which kicks off the shopping season, against the backdrop of a worsening cost-of-living crisis and the distraction of the soccer World Cup. The index is among the worst-performing sectors in Europe, with a 32% drop so far this year.

Real estate stocks tumbled 1.3%, with UK housing stocks leading the declines as a survey showed demand for rental homes in Britain rose in October as prospective first-time buyers put off purchases.

Still, the benchmark STOXX 600 was set for its sixth straight week of gains, helped by signs that the U.S. Federal Reserve could temper its pace of interest-rate hikes as well as better-than-expected earnings season.

The index has rallied more than 15% since hitting a trough in late September, slightly outperforming a 13% climb in S&P 500 from its October lows.

"As we are about to enter 2023 and transition from inflation to disinflation, we think equities should face less pressure from the rates markets," Emmanuel Cau, European equity strategist at Barclays wrote in a morning note.

"However, we caution against extrapolating the recent risk-on into the new year, amid a still unfavourable growth-policy trade-off and toppish market technicals."

Investors on Thursday largely looked past the minutes of the European Central Bank's October meeting that showed policymakers feared inflation may be getting entrenched and so rates would need to rise further.

Data on Friday showed the German economy grew slightly more in the third quarter than preliminary figures suggested, bolstered by consumer spending.

Among individual stocks, Credit Suisse slipped 1.4% to a record low in the wake of capital raise plans and weak earnings report released this week.

OVHcloud climbed 2.1% after the European Investment Bank granted the French software group a 200 million euro ($208.18 million) loan to support its expansion in Europe. (Reporting by Sruthi Shankar in Bengaluru; Editing by Savio D'Souza and Arun Koyyur)