European Stocks Turn Mixed; Asia Declines

Updated from 5:54 a.m. EST

LONDON -- European stocks turned mixed Friday after declines in Asia and ahead of a key speech from European Central Bank President Jean-Claude Trichet.

The FTSE 100 index of leading British shares fell 0.02%, while Germany's DAX rose 0.5%. The CAC-40 in France fell 0.2% around 6:40 a.m. EST.

Wall Street was set to open lower on Friday. On Thursday, the Dow Jones Industrial Average and S&P 500 each slid around 1% amid mounting concerns about the U.S. economic recovery and an analyst's downgrade of the chip industry.

Investors are closely eyeing the 1,100 level for the S&P 500. Earlier this week, it managed to close above 1,100 for the first time in over a year but its failure to sustain the level is stoking market talk that the rally since March has dried up ahead of the year end.

Stock markets have rallied strongly since March's lows as investors reined in their economic doomsday expectations to factor in a swifter than anticipated global economic rebound, but recent disappointing U.S. housing figures and mixed earnings from some of the country's leading retailers have dented the optimism. Many investors think stock valuations are now pricing in too rapid an economic recovery.

Given the paucity of economic and corporate news in Europe, most attention in Europe will focus on a speech later from Trichet, who will deliver the keynote address to the European Banking Congress in Frankfurt. With the title of the speech labeled "After the Crisis," investors will be looking for hints about when the European Central Bank will start to raise its key interest rate from their current record low of 1%.

Earlier Friday, Japan's Nikkei 225 stock average lost 0.5% to 9,497.68 even though the Bank of Japan revised up its forecasts for the world's second largest economy. Sony(SNE) slid 2.4% as investors remained unconvinced by CEO Howard Stringer's plans to turnaround the loss-making electronics giant. Sony is headed for a back-to-back billion dollar loss in the fiscal year ending March 2010.

Hong Kong's Hang Seng dropped 0.8%, and Australia's benchmark fell 1.3%. South Korea's Kospi was flat, while China's Shanghai index shed 0.4%.

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