U.K. equities were the center of European markets' attention Friday, with construction firms Balfour Beatty PLC and Carillion PLC both soaring more than 10% on merger talks, and Royal Bank of Scotland Group PLC rocketing 15% after the bank posted impressive quarterly earnings a week earlier than expected.

In a joint statement late Thursday responding to media speculation, Balfour Beatty and Carillion said work is under way to develop a strategy and business plan for a combined entity, that would create a firm worth about over 3 billion pounds ($5.12 billion) based on their closing share prices Thursday.

RBS on Friday, meanwhile, said it had nearly doubled its first-half pretax profit. The lender wasn't expected to release results until next week.

On the downside, British pay- and satellite-television giant British Sky Broadcasting Group PLC was one of the biggest fallers, down 2.5% after it confirmed it agreed to buy all of Sky Italia and most of Sky Deutschland AG from Rupert Murdoch's 21st Century Fox, for about GBP5.35 billion, mostly in cash.

21st Century Fox was until June 2013 part of the same company as News Corp, publisher of The Wall Street Journal and Dow Jones Newswires.

Despite several big climbers across Europe, however, broader indexes edged lower Friday, with any additional optimism inspired by strong consumer sentiment data out of Germany also offset by lasting geopolitical concerns and some disappointing U.S. corporate earnings figures overnight.

The pan-European Stoxx 600 index edged 0.3% lower in early trade, with Frankfurt's DAX falling 0.4% even though figures showed that consumer sentiment in Germany has risen to its highest level in nearly eight years.

The Nuremberg-based GfK institute, however, did warn that the downing of Malaysia Airlines Flight 17 could still cloud the consumer mood in coming months. Most of the month's GfK survey was conducted before the July 17 crash.

Late Thursday, U.S. defense and diplomatic officials said that Russia is firing artillery across its border at Ukrainian military positions. Those assertions came in the wake of European Union diplomats saying that they are moving to place sanctions on a range of Russian economic sectors, in what would be a significant escalation of the bloc's efforts to isolate Moscow for its alleged support of rebel groups in eastern Ukraine.

Moscow's Micex index dropped 0.6% in early trade while the country's dollar-traded RTS lost 0.7%. The ruble was marginally higher against the dollar at 35.03, but has still depreciated almost 7% against the greenback year-to-date.

The violent conflict in the Middle East persisted too.

Elsewhere Friday, corporate earnings remained in focus. Late Thursday, web retailer Amazon.com Inc. reported a wider-than-expected loss of $126 million for the second quarter despite a 23% jump in revenue. Earlier in the session General Motors reported profit had plummeted 80% in the quarter, due to a number of recalls.

Later in the day, investors will be eyeing the first release of second-quarter gross domestic figures out of the U.K.

"We predict second quarter to have grown 0.8% quarter-on-quarter, consistent with 3.1% annual growth. We expect growth to have been driven by domestic demand, which continues to display the same strength as in the first quarter," Barclays economists wrote in a note.

In commodity markets, Brent crude was marginally higher at $107.18 a barrel while gold edged 0.1% higher to $1,292 per troy ounce.

Write to Josie Cox at josie.cox@wsj.com

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