European stocks mostly fall

London - European stock markets mostly fell Friday despite positive Chinese manufacturing data, as shares in Royal Bank of Scotland tumbled on news that the state-rescued lender was ring-fencing massive toxic debts.

The euro fell for a second day running against the dollar on talk of a possible cut to eurozone interest rates when the ECB meets next week -- and in the wake of falling inflation across the single-currency area, analysts said.

London's benchmark FTSE 100 index added 0.17% to 6 743 points in afternoon trading.

Frankfurt's DAX 30 eased 0.07% to 9 027 points and in Paris the CAC 40 dipped 0.08% to 4 297.17 compared with Thursday's closing values.

The euro slid to $1.3500 from $1.3579 late in New York on Thursday.

The dollar rose to ¥98.43 from 98.37.

The British pound rose to €1.1818, but against the dollar slid to $1.5958.

On the London Bullion Market, the price of gold fell to $1,317.80 an ounce from $1,324 on Thursday.

"The sharp drop in eurozone consumer price inflation to 0.7% in October means that an ECB interest rate cut from 0.50% to 0.25% is now a very real possibility at its 7 November policy meeting," said Howard Archer, chief European economist at consultants IHS Global Insight.

The European single currency had already fallen heavily on Thursday in reaction to the numbers.

On Friday, Beijing said its official purchasing managers' index (PMI) of manufacturing activity advanced to 51.4 last month from 51.1 in September.

Anything above 50 suggests growth, while a figure below suggests contraction.

Traders welcomed the data, which suggest the world's number two economy is gradually emerging from a slowdown felt early this year.

US stocks opened higher on the encouraging Chinese data, with the Dow Jones Industrial Average advancing 0.37% to 15 602.92 points after five minutes of trade.

The broad-based S&P 500 picked up 0.26% to 1 761.12, while the tech-rich Nasdaq Composite Index increased 0.25% to 3 929.41.

Asian markets ended mixed on Friday, with Tokyo losing 0.89% on an 11% slump in Sony shares.

Shanghai rose 0.37 and Hong Kong added 0.19%, lifted by better-than-expected Chinese manufacturing data.

Mumbai ended up 0.15%, or 32.29 points to a new record close of 21 196.81, its fourth straight day of gains, aided by foreign capital inflows and easing of global concerns.

Sydney slid 0.27%, while Seoul rose 0.46%.

Royal Bank of Scotland shares slumped 6% to 344.60 pence after the lender announced on Friday plans to create an internal 'bad bank' to run down 38 billion of high-risk assets and accelerate its return to the private sector.

RBS hopes to remove all of the toxic assets, equivalent to $61bn or 45 billion euros, from its balance sheet over the next three years, the bank said in a statement as it announced also a third-quarter net loss of 828 million.

Shares in French carmaker Renault, the biggest shareholder in Nissan, slid 4.3% to €61.75 after the Japanese company slashed its full-year profit forecast by 15%.

Vodafone grew 2.2% to 231.00 pence on media reports linking the British mobile phone giant to a possible takeover by US telecoms giant AT&T next year.

On the downside, avionics group Meggitt tumbled 9.8% to 510.41p after the supplier of parts to planemakers Boeing and Airbus lowered its full-year revenue guidance.