German business confidence fell short of expectations Friday, weighing on German stocks as the report underscored worries that growth in Europe's largest economy is losing steam.

Widely watched figures from the Ifo Institute showed its business-climate survey fell to 108.0 in July, marking a third straight monthly decline and missing expectations for 109.4. The reading for June was 109.7.

Germany's business climate has recently been pressured, in part by concerns about local companies with ties to Russia, which has been hit with sanctions related to tensions with Ukraine.

"Geopolitical tensions are taking their toll on the German economy," Ifo President Hans-Werner Sinn said in a statement.

Earlier Friday, the GfK institute said German consumer sentiment reached its highest level since December 2006, but also warned that last week's downing of Malaysia Airlines Flight 17 could weigh on consumer sentiment in coming months.

Market reaction: Germany's DAX 30 index extended its loss to 0.3% at 9,761. The move cut into the DAX's weekly gain, which appeared set at 0.4%.

The euro (EURUSD) fell to a session low of $1.3442 after the IFO report, but has since pushed up to $1.3453. The Stoxx Europe 600 index remained lower by 0.1%.

Elsewhere in Europe, France's CAC 40 index fell 0.6%. The U.K.'s FTSE 100 seesawed after government data showed U.K. economic growth expanded in the second quarter to above pre-crisis levels. The pound (GBPUSD) briefly rose to $1.699 after the report but later returned to $1.697.

LVMH dinged: LVMH Mo√ęt Hennessy Louis Vuitton shares dropped 7% after the luxury-goods firm said first-half profit fell 4%, highlighting the sector's exposure to fluctuations in foreign-exchange rates.