By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- European stocks lost ground Friday, with investors remaining cautious following a cease-fire in eastern Ukraine.

Ukrainian President Petro Poroshenko in a statement said representatives have signed an agreement to halt fighting between Ukrainian forces and pro-Russia rebels, starting at 6 p.m. Kiev time. Russian news agency Interfax reported pro-Russia rebels also agreed to halt fire.

Although Friday's peace talks had been anticipated, U.S. and European leaders at a North Atlantic Treaty Organization summit in Wales still discussed imposing toughen sanctions on Russia over the Ukraine crisis, and there were signs that some countries could decide to send weapons to Kiev.

European share trading had ended for the week when U.S. President Barack Obama said the U.S. and European Union were finalizing more sanctions against Russia.

Markets: The U.S. dollar fell against the Russian ruble (USDRUB) after news of the deal, but eventually recouped its losses, leaving the greenback buying 37.053 rubles versus 36.958 rubles on Thursday. Russian blue-chips finished higher, with MICEX index gaining 1.2% to 1,474.71.

The Stoxx Europe 600 fell 0.4% to 347.57, but pared losses as Germany's DAX 30 index turned higher for a 0.2% gain at 9,747.02.

The DAX 30 logged a 2.9% weekly advance, a fourth consecutive weekly win. The Stoxx 600 notched a 1.6% weekly gain, also be its fourth straight weekly rise.

"Ever tougher sanctions against Russia are not good for the German economy, but this is being offset by a weaker euro, helping exporters in particular," said Mark Tinker, head of AXA Framlington for Asia, in a report. "The European equity markets have thus rallied as the euro has weakened, with emphasis on cyclicals, financials and exporters."

The euro fell roughly 1.3% this week against the greenback, according to FactSet data. The euro slid to a near 14-month low, trading below the $1.30 level, after the European Central Bank on Thursday cut interest rates and announced a "private QE" program in an effort to fight low inflation.

The euro (EURUSD) found a bit of relief Friday, buying $1.2964 compared with $1.2944 late Thursday, as a worse-than-expected August U.S. jobs report pressured the dollar against major rivals.

Advancers on the Stoxx 600 were led by 7.3% rise in Neopost after the mailroom-equipment maker reiterated its full-year view.

BP shares closed up 2.6%, paring Thursday's 5.9% tumble in the wake of an unfavorable court ruling against the British oil major. See more of Friday's European movers.

In France, the Paris CAC 40 fell 0.2% to 4,486.49, but closed the week up 2.4%. The U.K. FTSE 100 lost 0.3% to end at 6,855.10, in part as shares of Royal Bank of Scotland dropped 2.2%.

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