US markets finished a lacklustre week on a muted note on Friday as concerns about rising Treasury bond yields competed with enthusiasm over artificial intelligence equities.

Of the major indices, only the Nasdaq mustered a gain in Friday's session. The index was also the only of the three leading US benchmarks to conclude the week higher.

"Equities are kind of treading water," said LBBW's Karl Haeling. "A negative influence to some extent is the rise in bond yields."

The latest US consumer price index data released this week showed prices ticked higher in November and the wholesale data also showed stubborn inflationary pressures.

"Yields rose to their highest levels in over two weeks as markets brace for the Federal Reserve's final meeting of the year, reflecting concerns over sticky inflation," said Chris Beauchamp, chief market analyst at online trading platform IG.

There is also growing concern over the inflationary pressures from President-elect Donald Trump's pledges to cut taxes and impose tariffs, as inflation still stands above the Fed's target.

"While the markets still anticipate a rate cut from the Federal Reserve next week, the likelihood of a move in January has dropped," said Patrick Munnelly, partner at broker Tickmill Group.

The CME FedWatch tool shows the market sees a more than 75 percent chance that the Fed will hold rates steady in January.

In Europe, the Paris CAC 40 index ended the day down 0.2 percent after French President Emmanuel Macron named his centrist ally Francois Bayrou as prime minister, ending days of deadlock over finding a replacement for Michel Barnier.

Frankfurt also dipped, with Germany's central bank sharply downgrading its growth forecasts on Friday for 2025 and 2026. It predicted a prolonged period of weakness for Europe's biggest economy.

London stocks were also lower after official data showed that the UK economy unexpectedly shrank for the second consecutive month in October.

The euro recovered after flirting with two-year lows against the US dollar following a warning Thursday by ECB president Christine Lagarde that the eurozone economy was "losing momentum", cautioning that "the risk of greater friction in global trade could weigh on euro area growth". (AFP)