By Carla Mozee, MarketWatch

European stocks fell Friday, closing out their worst week so far this year with investors cautious ahead of Sunday's referendum over Greece's bailout.

The Stoxx Europe 600 fell 0.5% to 383.42, with all sectors trapped in the red. The pan-European index for the week fell 3.4%, the sharpest weekly pullback since mid-December.

The week ended much as it began, with uncertainty about what's next for Greece. Voters in the country on Sunday will be asked whether to accept the terms of a bailout agreement set out by its lenders. Greek Prime Minister Alexis Tsipras late Thursday (http://www.marketwatch.com/story/tsipras-battles-to-sway-greek-voters-as-europeans-warn-of-difficult-talks-ahead-2015-07-02-191035740) urged a "no" vote, saying a rejection will bolster his chances of quickly securing a better deal. Read: Know this about Sunday's Greek referendum (http://www.marketwatch.com/story/know-this-about-sundays-greek-referendum-2015-07-03).

"As for Sunday, the feeling is the risks are skewed to the downside" for the euro, Simon Smith, chief economist at FXPro wrote in a note Friday. "A rejection of the proposals would put Greece on course for an exit from the single currency. An acceptance would open up the doors for negotiation, but we have to remember that the proposal is also effectively null and void in itself, so it would be back to the drawing board."

The euro was buying $1.1108, versus $1.1086 late Thursday in New York. Polling suggests Sunday's result will be tight (http://www.marketwatch.com/story/greek-debt-crisis-poll-shows-referendum-vote-is-neck-and-neck-2015-07-03).

On the country indexes, Germany's DAX lost 0.3% to 11,058.39, and France's CAC 40 fell 0.6% to 4,808.22. For the week, the DAX and the CAC fell 3.8% and 5%, respectively.

Portugal's PSI 20 fell 0.7% to 5,579.38, marking a 4.3% weekly decline. Spain's IBEX 35 gave up 0.6% to 10,779.80, locking a weekly fall of 5.2%.

Italy's FTSE MIB ended 0.5% lower at 22,508.13 on Friday. It ended the week down by 5.3%.

Trading in Greek stocks has been closed all week. Greek bond prices turned higher Friday, pulling the yield on 10-year government debt down 6 basis points to 14.83%, according to Tradeweb data.

In London, the U.K.'s FTSE 100 lost 0.7% at 6,585.78. The FTSE 100 notched a weekly drop of 2.5%

Voting in the Greek referendum will take place between 7 a.m. and 7 p.m. local Greece time, or 12 a.m. to 12 p.m. Eastern Time on Sunday. Results are expected to come in about two to four hours afterward.

Data: There was some brighter news from the eurozone Friday, with business activity hitting a four-year high in June (http://www.marketwatch.com/story/eurozone-business-activity-hit-4-year-high-in-june-2015-07-03). In a final reading, data firm Markit said its composite purchasing managers index was 54.2, up fractionally from a preliminary estimate of 54.1. A reading above 50 indicates activity is increasing.

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