Global stock markets were mostly higher but a mixed set of US data took the gloss off an otherwise strong showing yesterday, driven by hopes the global recovery remains on track despite the European debt crisis.
In Europe, some of the early gains were pared by the finish as investors tracked the uncertain opening on Wall Street but markets were mostly higher.
London's benchmark FTSE 100 index of leading shares closed up 0.61 per cent at 5,163.68 points. In Paris, the CAC 40 rose 1.11 per cent to 3,555.52 points but in Frankfurt the DAX slipped 0.14 per cent to 6,047.83 points.
Madrid stood out with a gain of 3.95 per cent, led by the banks after Spain's top lender Santander said it expected to match 2009's earnings this year, helping ease some concerns over the country's debt and deficit problems.
IG Index analyst David Jones in London said trade was volatile "with US data raising familiar concerns about how solid the economic recovery is".
"A strong finish to trading on Wall Street on Thursday has given a welcome boost to shares in London," said Anthony Grech, head of research at financial spread-betting company IG Index.
Asian and European shares posted solid gains earlier after an overnight rally of 2.76 per cent on Wall Street boosted risk appetite, encouraging investors to look for bargains after recent heavy losses.
Dealers said, however, that the picture remained very mixed overall. The markets want European governments to take the measures needed to balance the public finances but at the same time fear such steps could undercut growth.
US data supports the recovery theme but, as was the case yesterday, it is not a one-way story - US retail sales, a key component of growth, fell in May but paradoxically, US consumer confidence improved for June.
US employment figures paint a similar picture of mixed progress. Chinese data yesterday showed a slowdown in factory output and investment growth even as inflation picked up, complicating Beijing's efforts to maintain steady economic growth.
In New York, the market opened lower after the May retail sales figures but then recovered some ground on the better-than-expected consumer sentiment.
The blue-chip Dow Jones Industrial Average was down 0.39 per cent while the tech-rich Nasdaq Composite index was up 0.22 per cent at around 1640 GMT.
"The big question is whether the stock market will hold the gains realised from (Thursday's) huge market rally," said Frederic Dickson at DA Davidson & Co. "Today's May retail sales report was disappointing."
US retail sales fell for the first time in eight months in May, dropping 1.2 per cent against market forecasts for a rise of 0.2 per cent.
The steep decline in retail sales "confirms more than threatens the forecast for modest spending growth going forward," said Scott Hoyt at Moody's Economy.com. "Consumers will not lead the recovery," he added.
Meanwhile, the University of Michigan's consumer sentiment index rose to 75.5 in June from 73.6 in May, its highest level since January 2008 and a percentage point above forecasts.