Europe markets come off lows

LONDON, England (CNN) -- European markets came off their lows early on Friday afternoon as the outlook brighten for a positive session on Wall Street.

London's FTSE 100 was was 0.1 percent to 3,962.5 and the CAC 40 blue chip index in Paris slipped 0.4 percent to 3,128.76, while Frankfurt's electronically traded Xetra Dax was up 0.7 percent to 3,546.80. The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, edged up 0.1 percent to 896.07.

Friday began with a sell-off in Europe -- coming off a rebound in the previous session after four straight days of losses -- sparked by renewed declines on Wall Street, which also followed a brief rally, due to more bookkeeping concerns and weak forecasts from a string of tech companies. Full story)

AOL Time Warner (AOL), the parent company of CNN, tumbled on Thursday as U.S. investors reacted to its disclosure that the Securities and Exchange Commission is probing the accounting practices of the world's largest media company. It also posted flat results late on Wednesday. (Full story)

The tech sector was also hit by disappointing profits and a bearish forecast from Taiwan Semiconductor Manufacturing, the world's biggest chip maker, which sparked a sell-off on Asian markets. (Full story)

But European investors turned their attention to other sectors, with the hardest hit being construction and mining stocks. However, as sentiment looked set to improve on Wall Street, buyers came back into the market.

Saint-Gobain (PSGO), the French glass and building materials group, plunged more than 27 percent to 26.20 euros after it warned on Thursday that its 2002 net profit would only just match last year's after an eight percent fall in first-half net profit. (Full story)

Anglo American (AAL) led the mining sector lower, falling 11.4 percent to 850 pence as commodities prices -- especially gold and silver -- weakened this week, while Rio Tinto (RIO) fell 2.7 percent to 1,031 pence. Steel maker Corus (SC) dropped 7.2 percent to 58 pence.

Among the other decliners on Friday were Deutsche Telekom (FDTE), Europe's largest telecoms operator, which fell 4.7 percent to 11.43 euros in Frankfurt. France's Alcatel (PCGE), the world's fifth biggest telecom equipment maker, lost 5.9 percent to 5.09 euros posting a second-quarter net loss of 1.43 billion euros earlier this week. (Full story)

Swiss Life was up 3.3 percent to 210 Swiss francs. On Friday, the group declined to comment on a newspaper report that it hired Deutsche Bank to sell the insurer's German operations and Goldman Sachs to sell private bank Banca del Gottardo. (Full story)

Germany drugmarker Schering (FSCH) rose 1.2 percent to 48 euros after it posted a smaller rise in second-quarter operating profit than many analysts forecast but reiterated its guidance of double-digit profit growth for the full year. (Full story)

The AEX index in Amsterdam was down 4.3 percent and Milan's MIB30 index lost 2.1 percent, while the SMI in Zurich fell 1.4 percent.

In the U.S. on Thursday, questions about accounting practices at AOL Time Warner (AOL) pushed tech stocks sharply lower, while gains in some consumer companies -- such as Johnson & Johnson (JNJ), Procter & Gamble (PG) -- helped blue chips close little changed, a day after a sharp rally.

The Dow Jones industrial average ended the day only 4.98 points lower at 8,186.31 -- after gyrating wildly in a 368-point range. On Wednesday, the 30-component Dow, the world's most widely watched stock average, jumped 488.95 points and 6.35 percent, its second-biggest one-day point gain ever and its biggest percentage increase since shortly after the October 1987 crash.

The Nasdaq composite index fell 50.15 points, or 3.9 percent, to 1,240.08, erasing most of its gains from the previous session's rally, when it shot up 61 points. The Standard & Poor's 500 index lost 4.75 points to 838.68.

Wall Street was expected to open higher on Friday. S&P 500 index futures was up 5.2 points to 842 on the Globex trading system, while fair value -- a measure that take account of interest costs and dividend payments -- was calculated at 840.54.