European stocks recover from nervous session

European stock markets recovered from early losses Friday, as investors struggled to find direction amid receding hopes of fresh economic stimulus from the Fed and diplomatic manoeuvring on Greece. London's benchmark FTSE 100 index of top companies ended the day unchanged at 5,776.6 points, while in Frankfurt the DAX 30 gained 0.31 percent to 6,971.07 points and in Paris the CAC 40 edged up 0.02 percent to 3,433.21 points. US stocks also reversed gear in midday trading with the Dow Jones Industrial Average up 0.49 percent and the tech-heavy Nasdaq rising 0.40 percent. The European single currency fell to $1.2532 from $1.2562 late in New York on Thursday, when it had struck a seven-week peak at $1.2590. Markets crawled back into the green in the final minutes of trade on "reports the European Central Bank was exploring setting yield targets on market borrowing prices," said Alexandre Baradez, analyst at Saxo Bank in Paris. Sentiment was bearish most of the session with continued speculation over new stimulus measures in the United States after minutes released this week from the Federal Reserve's latest policy meeting showed US central bankers worried about slowing growth. British growth figures, showing gross domestic product shrank 0.5 percent between April and June, also weighed on the mood. That tallied with expectations and marked an upgrade from the prior estimate of a 0.7-percent contraction. Britain was already in recession after posting two successive negative quarters since late 2011. The economy shrank by 0.4 percent in the fourth quarter of last year and by 0.3 percent in the first quarter of 2012. Concerns about Greece added to the nervous day, with Prime Minister Antonis Samaras meeting German Chancellor Angela Merkel as Athens struggles to meet reform conditions for continued financial aid. Merkel offered Samaras a ray of hope, stressing that she wanted debt-burdened Greece to stay in the eurozone and pledging German help. "I am deeply convinced that the new Greek government, under the leadership of Prime Minister Samaras, is doing everything to solve the problems that Greece is facing," the German chancellor said following the talks. Merkel has said she is waiting for the so-called troika of auditors from the European Union, International Monetary Fund and the European Central Bank to complete a review of Greece's performance under the bailout plan before agreeing to revisit any terms. Samaras goes on to meet French President Francois Hollande in Paris on Saturday. Borrowing costs for Italy and Spain rose meanwhile, with the interest rate or yield on 10-Italian bonds at 5.716 percent on public debt markets, compared with 5.699 percent on Thursday. Spain's 10-year rate rose to 6.419 percent from 6.346 percent on Thursday. Poor industry-related data from China and the eurozone released Thursday increased concerns about the slowdown in the global economy. In Asian trade Friday, Tokyo dipped 1.17 percent and Hong Kong fell 1.25 percent.