San Francisco Frontiers - Stocks mixed after rally over interest rate outlook

Wall Street's three main indexes were largely flat at the open, after hitting records on Thursday.

The Paris stock exchange was in the red and Frankfurt in the green in afternoon deals.

London, which has lagged behind most major markets so far this year, was the strongest gainer, with the FTSE 100 index up 0.6 percent in early afternoon trading.

It had gained almost two percent Thursday as the Bank of England signalled it could start cutting interest rates over the UK summer.

"This shift in rate cut expectations from the BOE is like a red flag to a bull, and markets have rallied sharply," said Kathleen Brooks, an analyst at XTB.com.

"The FTSE 100 is benefitting more than the other indices because it was cheap," she said.

The Swiss National Bank on Thursday became the first major central bank to cut rates aimed at combatting soaring inflation.

Wall Street indexes hit record levels Thursday before profit-taking took them off their highs, but are still on track to end the week with health gains.

Equities across the world had surged Thursday in response to the Federal Reserve's closely watched dot plot projection that it would lower borrowing costs three times this year, even after figures showed prices ticking up in January and February.

"The prevailing belief is that rate reductions are cautiously on the horizon (and) investors are embracing the idea of a soft economic landing," said Stephen Innes, managing partner at SPI Asset Management.

"However, with US yields holding firm and the dollar rallying on the Fed's upward adjustments to growth and inflation forecasts, there may eventually be some second-guessing of the Fed's rate cut outlook," he said.

Apple was up slightly Friday after being walloped Thursday when US regulators said they were opening antitrust proceedings against the company for how its limits competition in the iPhone ecosystem.

In the eurozone, Paris and Frankfurt appear to have largely priced in a rate cut from the European Central Bank in June.

"(ECB President) Christine Lagarde's comments this week suggest that a first ECB rate cut in June remains most likely but there is a significant risk that the easing cycle will start later," said Franziska Palmas, senior Europe economist at Capital Economics.

Frankfurt rose as a key survey showed that German business morale rose more strongly than expected in March.

The Ifo institute's closely watched confidence barometer, based on a survey of around 9,000 companies, rose to 87.8 points, from 85.7 in February.

- Key figures around 1340 GMT -

New York - Dow: DOWN less than 0.1 percent at 39,775.11

New York - S&P 500: UP less than 0.1 percent at 5,242.62

New York - Nasdaq Composite: DOWN less than 0.1 percent at 16,392.88

London - FTSE 100: UP 0.6 percent at 7,932.75 points

Paris - CAC 40: DOWN 0.3 percent at 8,154.21

Frankfurt - DAX: UP 0.2 percent at 18,211.44

EURO STOXX 50: DOWN 0.5 percent at 5,028.87

Tokyo - Nikkei 225: UP 0.2 percent at 40,888.43 (close)

Hong Kong - Hang Seng Index: DOWN 2.2 percent at 16,499.47 (close)

Shanghai - Composite: DOWN 1.0 percent at 3,048.03 (close)

Pound/dollar: DOWN at $1.2613 from $1.2653 on Thursday

Dollar/yen: DOWN at 151.19 yen from 151.65 yen

Euro/dollar: DOWN at $1.0825 from $1.0861

Euro/pound: DOWN at 85.79 pence from 85.94 pence

Brent North Sea Crude: UP 0.2 percent at $85.94 per barrel

West Texas Intermediate: UP 0.2 percent at $81.25 per barrel

O.Green--SFF