European stock markets fell modestly Friday after a mixed performance in Asia as investors booked profits on recent gains ahead of the U.S. open, though reports that British bank Barclays PLC may get the financial all-clear from the country's financial regulator gave the banking sector a boost.
Germany's DAX was down 28.41 points, or 0.7 percent, at 4,230.96 while France's CAC-40 was 22.31 points, or 0.8 percent, lower at 2,869.76.
Meanwhile, the FTSE 100 index of leading British shares was down only 2.36 points, or 0.1 percent, at 3,922.84 despite news that the country's economy contracted by a bigger than anticipated 1.6 percent in the fourth quarter of 2008, as banking stocks were buoyed by a Financial Times report that the Financial Services Authority was about to say that Barclays does not need a capital injection from the British government.
Barclays' share price spiked 8.7 percent to 152.30 pence ($2.19). Others rose in its slipstream, including Lloyds Banking Group, which is majority-owned by the government. Lloyds stock was up 8.1 percent, at 74.60 pence.
"Barclays has been the star of the show in what is a moribund day," said Howard Wheeldon, senior strategist at BGC Partners.
Stocks around the world have rallied strongly this week—with the technology Nasdaq index turning positive for the year—amid some optimism that the U.S. economy, the world's largest, may be over the worst. In addition, the bank rescue plan unveiled earlier in the week from U.S. Treasury Secretary Tim Geithner garnered some plaudits from investors.
Good demand at a U.S. government debt auction—critical to funding the country's huge economic stimulus and financial bailout programs—also encouraged traders.
U.S. stocks are expected to open lower later. Dow futures were down 62 points, or 0.8 percent, at 7,787 while the broader Standard & Poor's 500 futures were 8.1 points, or 1 percent lower, at 819.20.
On Thursday in New York, the Dow gained 174.75, or 2.3 percent, at 7,924.56, its highest close since Feb. 12, while the S&P rose 18.98, or 2.3 percent, to 832.86.
The main question facing investors at the moment is whether the current rally in stock markets around the world is just a bear market rebound or whether it marks a real turning point in sentiment and behavior.
"I am still in the bearish camp as far as the prospects for the global economy are concerned and I am not sure that the current equity market rally will extend much further," said Neil Mackinnon, chief economist at ECU Group.
He said that the S&P would have a tough time breaking through 880.
Earlier in Asia, Hong Kong's Hang Seng index edged up 10.52 points, or 0.1 percent, to 14,119.50 after a choppy session, while Australia's S&P/ASX index added 0.7 percent to 3,672.3.
Japanese stocks reversed early gains, ending an otherwise stellar week on a slightly lower note. The benchmark Nikkei 225 average dipped 9.36 points, or 0.1 percent, to 8,626.97. But the index gained 8.6 percent over the past five sessions—its biggest one-week gain since October.
Tokyo's market was dragged lower by shares of shipping companies, which fell after sector leader Nippon Yusen K.K slashed its earnings forecasts for this fiscal year.
In mainland China, the Shanghai Composite Index rose for a second day, climbing 0.5 percent to 2,374.44, bringing its weekly gain to 4.1 percent. The advance was led by steel and silicon chip makers.
The Philippines' main index jumped 2.6 percent, while India's Sensex rose 0.4 percent to 10,039.38.
Oil prices retreated on concerns about the sustainability of recent gains. Benchmark crude for May delivery fell 85 cents to $53.49 a barrel on the New York Mercantile Exchange.
In currencies, the dollar fell 0.8 percent to 98 yen while the euro dropped 0.9 percent to $1.3386.
