Britain's benchmark stock index bucked the trend and rose modestly Friday after the part-nationalized Lloyds Banking Group PLC issued a buoyant business update.
However, profit-taking following strong gains this week and renewed fears about the Greek debt crisis ended up pushing most major European and U.S. markets lower.
In Europe, the FTSE 100 index of leading British shares closed up 7.51 points, or 0.1 percent, at 5,650.13 while Germany's DAX fell 29.88 points, or 0.5 percent, to 5,982.43. The CAC-40 in France ended 12.74 points, or 0.3 percent, lower at 3,925.44.
Wall Street traded lower — the Dow Jones industrial average was 54.87 points, or 0.5 percent, lower at 10,724.30 around midday New York time, while the broader Standard&Poor's 500 index fell 7.15 points, or 0.6 percent, at 1,158.68.
"Wall Street is on course to see its run higher being broken with the Dow's eight-day winning streak looking unlikely to make it to nine," said Anthony Grech, research analyst at IG Index.
The main reason why the FTSE closed higher was that Lloyds Banking Group, which is 41 percent owned by the British government, said it expects to report a profit this year as trading has so far been strong and provisions for bad assets are not as large as previously forecast. In a brief statement, the bank said that in the first 10 weeks of the year net interest margin has come in line with guidance and income growth has been good.
Its shares were up around 9 percent while those in Royal Bank of Scotland, which is more than 80 percent owned by the British government, rose 5 percent in Lloyds' slipstream.
Banks elsewhere were also in demand, including Germany's Commerzbank AG, as well as France's Credit Agricole SA and BNP Paribas SA.
Still, sentiment in the markets was constrained by renewed worries about Greece's debt crisis.
This week has brought new signs of European indecision and discord over the Greek debt crisis and there are now mounting expectations in the markets that Greece will be forced to turn to the International Monetary Fund for aid if European leaders can't agree on a bailout plan next week.
With Germany seemingly leaning towards IMF involvement, the euro slid again Friday, trading another 0.6 percent lower at $1.3527. As recently as Wednesday, hopes of an EU package materializing had seen the euro rise to above $1.38.
"Time is running out for Greece," said Jane Foley, research director at Forex.com.
Greece has a deadline — it needs to tap the bond markets for more cash in the next couple of months to rollover some euro20 billion worth of debt.
"If the EU do not soon come up with a system of guarantees which will cause Greek bond yields to fall in the open market, then it seems inevitable that Greece will approach the IMF for support," said Foley.
So far, there are few signs that Greek bond yields are falling — if anything, they are starting to tweak up again.
Earlier in Asia, Japan's Nikkei 225 stock average reversed early losses to climb 80.69 points, or 0.8 percent, to 10,824.72. South Korea's Kospi rose 0.7 percent to 1,686.11 and Hong Kong's market rose 0.2 percent to 21,370.82.
Elsewhere, Shanghai's market added 0.7 percent, Australia's index ticked 0.2 percent higher and Taiwan's market rose 0.2 percent.
Oil prices fell back towards $80 a barrel, with the benchmark contract down $1.81 at $80.39 a barrel.
