By Josie Cox 

European shares rose tentatively Friday, as investors weighed expectation-meeting euro-zone inflation data against disappointing German retail figures while keeping a sharp eye on flaring tensions in eastern Europe.

Following a sharp sell-off Thursday, the Stoxx Europe 600 ended the last trading session of the month up 0.3%, while France's CAC 40 and the U.K.'s FTSE added 0.3% and 0.2% respectively.

Germany's DAX, meanwhile, closed largely unchanged after figures showed retailers in July posted their biggest monthly fall in sales since January 2012. On Thursday the DAX, packed full of exporters which are highly sensitive to tensions between Moscow and the West, lost 1.1%.

"Clearly consumers as well as businesses in Germany are hurting," Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi UFJ said. He did imply however, that expectations may already have been revised lower after GfK consumer confidence data on Wednesday revealed the largest drop in German economic expectations since the 1980s.

Elsewhere, figures Friday showed that consumer prices in the 18 countries using the euro rose by just 0.3% year-over-year in August, representing the smallest rise since late 2009. Strategists said that the market's resilience was likely down to the figure meeting expectations. Many said however, that it does heap pressure on the European Central Bank to take more aggressive steps to fuel growth in the stagnant economy.

Late last week ECB President Mario Draghi hinted that the bank could be preparing further stimulus, even raising the prospect of quantitative easing, which sent the euro to an 11-month low against the dollar. On Friday, the bloc's currency lost 0.2% to trade at $1.315 against the greenback.

Economists have since concluded, however, that the ECB is likely to want to gauge the impact of its June measures and assess the take up of the targeted longer-term refinancing operation before taking further action.

"Anybody expecting the dramatic announcement of large-scale US-style quantitative easing next Thursday is highly likely to be disappointed," said Stefan Rondorf, strategist at Allianz Global Investors. "The ECB has not yet implemented the easing measures it announced in June and any more action would make it look like the Central Bank was panicking," he added.

Beyond the euro zone, investors' attention was firmly drawn to Russia on Friday, where the ruble fell to an all-time low against the U.S. dollar after Kiev said that Russian troops had entered eastern regions of Ukraine in support of pro-Russian rebels. Moscow, meanwhile, denied the claim that Russia now has a military presence in the neighboring country.

Soon after midnight on Friday, Russia's President Vladimir Putin issued a statement, urging rebels to cease fire and let Ukrainian troops get out of the blockade. Earlier this week, Mr. Putin told his Ukrainian counterpart Petro Poroshenko that it was "Ukraine's own internal business" to negotiate a truce with rebels.

Having underperformed most other currencies all day, the ruble eased to 37.18 versus the dollar, losing 1.2% in late European trade. Its previous record low against the greenback, was 37 rubles per dollar, which it hit on the first trading day of March after the West had threatened to punish Moscow for its annexation of Crimea.

"The latest developments suggest a meaningful escalation of the Russia-Ukraine conflict," Barclays economists wrote in a note.

Mr. Halpenny at Mitsubishi agreed that this would likely "have considerable consequences for the region and key parts of Europe."

Moscow's Micex ended the week 1.6% lower while the dollar-traded RTS index waned 2.4%.

U.S. markets, however, which also declined in the wake of rising tensions Thursday, shrugged off the conflict Friday with the S&P 500 rising 0.3% in late European trade, bolstered by strong data.

The Chicago Business Barometer, commonly called the Chicago PMI, rose 11.7 points in August to 64.3, regaining all the ground lost in July, when the index dropped to 52.6 for its largest point decline since October 2008.

The Thomson-Reuters/University of Michigan final-August sentiment index, meanwhile, increased to 82.5 from a preliminary reading of 79.2. Economists surveyed by The Wall Street Journal had anticipated a reading of 80.2.

Back in Europe, U.K. retailer Tesco PLC was the clear loser of the day, tumbling to the bottom of London's main index as well as the pan-European index, and pulling other retailers down with it, after issuing its third profit warning in as many years. The company, which is struggling against fierce competition in its key home market, also said it would slash its interim dividend and reduce capital expenditure.

"We think Tesco will also look at potentially exiting some international businesses," Citigroup analyst Pradeep Pratti wrote in a note.

At the other end of the spectrum, AstraZeneca PLC rose almost 2% on speculation the drug maker might be planning to resume previously aborted takeover talks with Pfizer Inc.

In commodities markets Brent crude oil added 0.4% to trade at $102.91 a barrel. Gold lost 0.2% to $1,288 having climbed on Thursday due to investors valuing it as a safe harbor.

Andrey Ostroukh in Moscow and Chiara Albanese in London contributed to this article

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

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