European stocks opened sharply lower on Friday as concerns over the systemic risk posed by German banks weighed on investor sentiment.

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The pan-European STOXX 600 was down 1.3 percent.

European stocks follwed the trend in Asia's trading session on Friday where markets were lower across the board on the final trading day of the quarter, after concerns over Deutsche Bank's stability drove down sentiment in US markets Thursday.

Concerns over Deutsche Bank sent its US-listed shares to an all-time low on Thursday and weighed on the broader financial sector. Shares of the German lender tanked over 7 percent on Friday.

The three major US indexes hit session lows shortly after Bloomberg reported that approximately 10 hedge funds were reducing their exposure to the embattled European bank. Deutsche later told CNBC this is "typical" when doing business with hedge funds. The bank's US-listed shares fell 6.67 percent, and dropped as much as 9.02 percent to USD 11.19, an all-time intraday low.

European investors will also be keeping an eye on Commerzbank on Friday after the German lender said that it was cutting thousands of jobs.

Euro zone flash inflation data for September and the region's unemployment figures for August are due on Friday, offering the latest indication on the health of the euro zone's economy.

There are no major earnings Friday.