A rally in world stocks and the euro lost steam on Friday as investors awaited a Greek debt restructuring deal aimed at avoiding a disorderly default, while Wall Street ended a stellar week on a mixed note after dismal earnings from Google and GE.
European stocks ended lower after a four-day rally and world equities were flat, supported by stronger Asian markets. Wall Street's Dow Jones industrial average ended the session with a healthy gain.
The euro slipped from a two-week high against the dollar as investors took profits from the common currency's rally this week -- its best weekly run since October.
The main U.S. stock indexes all ended the week more than 2 percent up. For the day, the S&P 500 and Nasdaq both settled nearly flat after being down most of the session, while the Dow rose nearly 1 percent.
General Electric Co
A strong outlook from IBM
Any trip-up in earnings could bring a short-term pullback, which is what we're seeing with GE and Google, said Lawrence Glazer, managing partner at Mayflower Advisors in Boston.
The valuations in an old-tech name like IBM support more appreciation, while a higher-growth name like Google had higher expectations to outshine.
The Dow <.DJI> gained 96.50 points, or 0.76 percent, at 12,720.48. The Standard & Poor's 500 Index <.SPX> was up 0.88 point, or 0.07 percent, at 1,315.38. The Nasdaq Composite Index <.IXIC> ended down 1.63 points, or 0.06 percent, at 2,786.70.
Google fell 8.4 percent to below $585.99. GE initially lost more than 1 percent but settled flat by the bell at $19.15.
Global stocks tracked by the MSCI All-World index <.MIWD00000PUS> rose 0.3 percent, helped by a run-up in Japanese and other Asian stocks.
The FTSEurofirst 300 <.FTEU3> index of top European shares settled down 0.3 percent. The Euro STOXX 50 volatility index
<.V2TX>, Europe's 'fear gauge' known as the VSTOXX, dropped to 25.03, a level not seen since early August, signalling a rise in investor appetite for risk.
Risk aversion is declining, and the wild swings between 'risk on' and 'risk off' trades that we've seen over the past year should slowly fade away sometime this year, said Franck Nicolas, head of global asset allocation at Natixis AM, which has 525 billion euros ($677 billion) under management.
The euro slipped 0.2 percent, falling from a two-week high against the dollar and hovering at below $1.2940.
For the week, however, it was up 2.4 percent for its biggest week in three months, helped by solid bond auctions in Spain and France on Thursday that boosted investor appetite for European risk assets.
German Bund futures prices fell one point, dragged down by mounting expectation of an imminent deal between Greece and its private bondholders over a bond swap that would prevent the country from sinking into a chaotic default and ease the euro zone's debt crisis.
Greece was closing in on an initial deal with private bond holders that would prevent it from tumbling into a chaotic default but lose investors up to 70 percent of the loans they have given to Athens.
There are encouraging signs the Greek PSI (private sector involvement) deal may be achieved soon, possibly even today and that's likely to keep Bunds on the defensive, said Nick Stamenkovic, rate strategist at RIA Capital Markets, who labelled Greece's fiscal metrics horrible and its growth picture pretty dire.
It will cause some relief in the markets but there are still problems ahead for Greece, he added.
The dollar <.DXY> was flat against a basket of major currencies.
The benchmark 10-year U.S. Treasury note was down 14/32, with the yield at 2.0299 percent.
In commodities trading, U.S. crude oil settled down 2 percent at $98.46 per barrel, while copper futures in London closed down 1.6 percent at $8,225 per tonne.