London - European equities held steady on Friday, after strong gains overnight on Wall Street and earlier in Asia, as investors eagerly awaited the outcome of "stress tests" on Europe's banks.
In early morning deals, London's FTSE 100 index fell 0.14% at 5 307.03 points, while Frankfurt's DAX 30 rose 0.21% to 6 155.40 points and in Paris the CAC 40 index added 0.20% to 3 608.76.
The Stoxx 50 index of top eurozone shares gained 0.22% to stand at 2 721.60 points.
In foreign exchange trading, the European single currency slipped to $1.2876, down slightly from $1.2886 late in New York on Thursday.
"We have seen fairly low volume trading this morning because everyone is holding their breath ahead of the stress test results, although central bankers have each touted their own banks' strengths," said Spreadex trader Chris Purdy.
"Test rigour remains in question, and the euro is down against other major currencies."
Later Friday, at 16:00 GMT, the Committee of European Banking Supervisors will publish results of tests conducted by national regulators on 91 European Union institutions which represent 65% of the EU banking sector.
They are designed to assess the capacity of major European lenders to withstand economic or financial crises and are awaited with pivotal interest by the financial sector.
"Markets are less than convinced about the rigour and credibility of the tests," said Lloyds Banking Group economist Kenneth Broux.
He added that investors "appear reluctant to take regulators for their word over their assessment of capital buffers and the treatment of sovereign debt exposure under a worst case economic scenario or credit event".
In Germany, the Ifo business confidence index for July showed the strongest rise for 20 years.
All three main European markets had surged higher on Thursday, following strong US corporate results, with banks in the lead on expectations that overall they have passed crucial tests on their financial well-being.
In earlier Asian deals on Friday, shares surged on the cautious optimism about the results of the European banking-sector assessments.
Seoul won 1.30%, Sydney leapt 1.91% and Tokyo rallied 2.28% in value.
Wall Street stocks also rebounded on Thursday amid better-than-expected corporate earnings, despite economic uncertainty, with the Dow Jones Industrial Average jumping almost two percent.
The New York market focused on second-quarter earnings, especially those of Dow members AT&T, Caterpillar and 3M - all of which topped analysts' profit projections.
Asian markets on Friday were lifted mainly by Wall Street's rebound, which wiped out a 109-point loss suffered a day earlier after US Federal Reserve chairperson Ben Bernanke warned of an "unusually uncertain" economic outlook.
Later this morning, meanwhile, London investors will digest the first official estimate of British economic growth for the second quarter, or three months to the end of June.
Britain's gross domestic product (GDP) expanded by 0.3% in the first three months of 2010, building on its modest emergence from recession at the end of last year.
- AFP