LONDON, Aug 24: European stock markets recovered from early losses on Friday, as investors struggled to find direction amid receding hopes of fresh economic stimulus from the Fed and diplomatic manoeuvring on Greece.

London's benchmark FTSE 100 index of top companies ended the day unchanged at 5,776.6 points, while in Frankfurt the DAX 30 gained 0.31 per cent to 6,971.07 points and in Paris the CAC 40 edged up 0.02 per cent to 3,433.21 points.

US stocks also reversed gear in midday trading with the Dow Jones Industrial Average up 0.49 per cent and the tech-heavy Nasdaq rising 0.40 per cent.

The European single currency fell to $1.2532 from $1.2562 late in New York on Thursday, when it had struck a seven-week peak at $1.2590.

Markets crawled back into the green in the final minutes of trade on “reports the European Central Bank was exploring setting yield targets on market borrowing prices,” said Alexandre Baradez, analyst at Saxo Bank in Paris.

Sentiment was bearish most of the session with continued speculation over new stimulus measures in the United States after minutes released this week from the Federal Reserve's latest policy meeting showed US central bankers worried about slowing growth.British growth figures, showing gross domestic product shrank 0.5 per cent between April and June, also weighed on the mood. That tallied with expectations and marked an upgrade from the prior estimate of a 0.7 per cent contraction.

Britain was already in recession after posting two successive negative quarters since late 2011.

The economy shrank by 0.4 per cent in the fourth quarter of last year and by 0.3 per cent in the first quarter of 2012.—AFP