GLOBAL MARKETS: European Stocks Tad Lower In Quiet Session

LONDON -- European stocks were generally a tad lower Friday, as investors attempted to balance the mixed U.S. economic data of the previous session with the temptation to take profits ahead of the weekend break.

U.S. stocks closed in negative territory Thursday after disappointing existing home sales at the end of a week that has been lackluster, with stocks taking a breather following their stellar summer run.

"The dive in markets since the FOMC [rate decision on Wednesday] is indicative of the tactical dangers of sitting in a market that expects good news," said Dominic Wilson, director of global macro and markets research at Goldman Sachs.

Wilson said the core picture of good growth news, falling inflation and easing financial conditions is still in place and Goldman's trading stance remains pro-risk, "reflecting our view that this pullback - like those before it - will likely be temporary," he said.

"But industrial news is undershooting a bit lately relative to high expectations and it is less clear what will take the market higher in the very near-term."

By 0810 GMT, and in a quiet market, the pan-European Stoxx 600 index was 0.4% lower at 238.99. Frankfurt's DAX fell 0.5% to 5576.4 and Paris's CAC-40 declined 0.3% to 3745.5. But London's FTSE 100 was up 0.1% at 5084.9, outperforming its peers.

Among the leading gainers in Europe, ING Groep was up 1% at EUR11.3 after Australia and New Zealand Banking Group said it will buy ING's stake in their Australia and New Zealand wealth management and life insurance joint venture for EUR1.1 billion.

Elsewhere, DnB Nor ASA, Norway's largest lender launched a 14 billion Norwegian kroner rights issue, meaning that it does not need to apply for state aid. It also reiterated its guidance on 2009 and 2010 loan-loss provisions and operating profit. It increased 4.5% to NOK66.7.

Merger and acquisition news continued. Unilever announced that it has made a binding offer to acquire the personal-care business of the Sara Lee Corp. for EUR1.28 billion in cash. The Anglo-Dutch manufacturer of food, home care and personal products was up 0.1% at 1737 pence in London.

Earlier, Asian stock markets finished lower overall Friday, dragged down by losses on Wall Street, with commodity plays weaker around the region.

In Japan, a rush of sell orders for Nomura Holdings weighed on financials, after the brokerage announced its second large share offering in six months, reigniting concerns about equity dilution.

Disappointing U.S. housing data, along with sharp falls in metals and energy prices on Thursday, also battered sentiment in Asia.

Japan's Nikkei 225 declined 2.6% and South Korea's Kospi Composite fell 0.1%. Hong Kong's Hang Seng index was 0.1% lower and the Shanghai Composite could not hold its gains, falling 0.5%.

U.S. stocks ended in the red on Thursday after mixed economic data which showed a fall in new claims for jobless benefits but elsewhere an unexpected drop in existing homes sales during August.

The Industrial Average fell 0.4% to 9707.4, the Nasdaq Composite index dropped 1.1% to 2107.6 and the Standard & Poor's 500-stock index shed 1% to 1050.8.

"Investors feasted on the housing report," said Jim Paulsen, chief investment strategist at Wells Capital Management. "There has been so much expectation for a correction that traders are quick to sell when any bad news comes out in case this is the beginning of a bigger downturn."

In the currency markets, the yen was stronger on demand from Japanese exporters and hedge funds, while the dollar and the pound were both weaker. The euro traded at $1.4670 at 0815 GMT, up from $1.4666 in late New York business Thursday. The dollar was quoted at Y90.58, down from Y91.27.

Sterling extended its losses and was trading at $1.6002, down from $1.6056 in New York. It dropped sharply on Thursday, battered by suggestions the Bank of England is comfortable with recent lower levels for its currency.

Elsewhere, spot gold was at $996.05 per troy ounce, up $1.05 from the New York close. But "with commodities generally coming under pressure in the near term, we cannot rule out a return to $982 before renewed buying interest emerges," said Barclays Capital.

The November Nymex crude oil futures contract was up 23 cents at $66.12 per barrel, after dropping 4.5% to a nine-week low on Thursday due to high U.S. oil inventories and weak demand.

Finally, European government bond markets were quiet Friday, extending their gains of the previous session as the market's attention focused on European equities in the absence of major euro-zone economic news. The December bund futures contract was up 0.16 at 121.28.