European shares were little changed in midmorning trade on Friday after sharp gains in the previous session on data showing the U.S. had emerged from recession, with firmer banks offsetting weaker energy stocks.
At 1003 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was virtually flat at 997.37 points, having risen 1.8 percent on Thursday. The benchmark is up more than 54 percent from its lifetime low of March 9, as investors have become more confident on the prospects for economic recovery.
The heavyweight banking sector was generally higher.
Banco Santander (SAN.MC), Barclays (BARC.L), Credit Suisse (CSGN.VX), Intesa Sanpaolo (ISP.MI), Societe Generale (SOGN.PA), UBS (UBSN.VX) and UniCredit (CRDI.MI) rose between 0.4 and 2.6 percent. Lloyds Banking Group (LLOY.L) was up 6.4 percent, adding to a 7.5 percent gain on Thursday, as investors expect the group to avoid the UK government's toxic asset insurance scheme by raising 21 billion pounds of new money.
Both Exane BNP Paribas and Credit Suisse upgraded Lloyds to neutral from underperform.
Bank of Ireland (BKIR.I) and Allied Irish Banks (ALBK.I) rose 10.9 and 7.7 percent respectively after the Irish parliament completed the committee stage of talks to approve its bad bank plan (NAMA), soothing jitters that the scheme faces delays.
Miners were higher, though copper gave back a little of Thursday's strong gains.
Anglo American (AAL.L), Antofagasta (ANTO.L), Rio Tinto (RIO.L), Vedanta (VED.L) and Xstrata (XTA.L) rose between 0.6 and 1.9 percent. It will be more difficult for markets to rally further now, said Bernard McAlinden, investment strategist at NCB Stockbrokers. You're not going to get the same positive surprises in economic news. The U.S. GDP was good news on the day, but the markets will remain worried about (monetary) stimulus withdrawal.
The index is on course to end October flat, having fallen to a three-week low earlier in the week.
Energy companies fell as crude prices CLc1 slipped below $80 a barrel. Total (TOTF.PA), ENI (ENI.MI), BP (BP.L) and Royal Dutch Shell (RDSa.L) fell between 0.4 and 0.7 percent.
Across Europe, Britain's FTSE 100 index .FTSE rose 0.3 percent, Germany's DAX .GDAXI and France's CAC 40 .FCHI fell 0.3 and 0.2 percent respectively.
Telecommunications gear maker Alcatel-Lucent (ALUA.PA) fell 6.9 percent after posting its twelfth straight quarterly net loss, hit hard by telecoms operators' sharp cutbacks in network investments. [ID:nLU541858]
British aeroplane parts supplier Meggitt (MGGT.L) rose 7.8 percent after it said civil aviation markets were showing signs of stabilisation while military markets remained healthy, as it looked forward to an air traffic recovery in 2010.
The world's largest advertising group by revenue, WPP (WPP.L), rose 4.6 percent after posting third quarter like-for-like revenue down 8.7 percent, at the higher end of forecasts, and saying it would improve profitability in the second half.
In macroeconomic news, France's gross domestic product (GDP) should grow as much or more in the third quarter than it did in the second, Economy Minister Christine Lagarde said during a visit to Hong Kong on Friday. The French economy emerged from recession in the second quarter, growing 0.3 percent, and surprising analysts.
Later in the day, investors' attention will switch to personal income and spending data from the United States.