British, French and German stocks rose on Friday on prospects of action to boost the Chinese economy after weak growth data, but shares in Rome and Madrid fell after Moody's cut Italy's rating before a key bond sale.
London's FTSE 100 benchmark index of leading shares gained 0.34 percent to 5,627.92 points, Frankfurt's DAX 30 index added 0.46 percent to 6,444.60 points and in Paris the CAC 40 won 0.11 percent to 3,138.87.
On the downside, Rome's FTSE Mib index dipped 0.57 percent at 13,505.83 points after an overnight downgrade from Moody's set the tone for the bond sale which is due later this morning.
Madrid's IBEX 35 index dropped 0.62 percent to 6,588.70 points in morning deals, as the Spanish government's 10-year bond yields held not far from the danger level of 7.0 percent.
The European single currency meanwhile languished close to a two-year dollar trough, trading at $1.2200. It had tumbled on Thursday to $1.2167 -- which was the lowest level since June 30, 2010 -- on jitters over debt-laden Spain.
Asian markets advanced on Friday, mirroring Wall Street gains, after China reported its economy was slowing in line with expectations, quashing fears data would show a "doomsday" scenario of the country heading for a hard landing.
China's economy expanded at the slowest pace for more than three years as dire problems overseas started to hit home hard, official data showed Friday, fuelling expectations of more stimulus moves.
"A late recovery on Wall Street and hopes for further stimulus from China, following another set of disappointing growth numbers, sees the FTSE higher this morning," said analyst Mike Mason of Sucden Financial Private Clients.
"It is however doubtful that these early gains will be held as investors continue to fret about global economic prospects.
"Moody's cut Italian bond ratings but thus far this is being overlooked," he added.
China's economy grew 7.6 percent in the second quarter year-on-year, the National Bureau of Statistics said.
That was the weakest rate since the world's second-largest economy expanded by 6.6 percent during the depths of the global financial crisis at the start of 2009.
"Global markets opened positively today as traders took an optimistic stance in the face of data showing that the Chinese economy grew at its slowest pace in three years due to flagging demand from Europe and the US," added Spreadex trader Shavaz Dhalla.
"Since traders are clearly becoming accustomed to receiving substantially worse-than-expected data, any data which shows a slight negative deviation from expectation -- as in the case of China's current growth rate -- helps to inject some hope into the markets.
European equities sank Thursday and the euro hit a new two-year dollar low, as sentiment was jarred by spiking Spanish bond yields, eurozone debt fears and receding hopes of fresh stimulus measures from the US Federal Reserve.
Eurozone concerns were stoked overnight after Moody's cut Italy's government bond rating by two notches, citing the knock-on effects of a possible Greek exit from the eurozone and Spain's banking woes.
The ratings agency reduced the rating from A3 to Baa2 -- which is just two notches above junk-bond status.
The news comes before eurozone heavyweight Italy attempts to raise 5.25 billion euros in a new government bond auction.
"Pessimism could quickly return to the markets as Moody's downgraded Italy's credit rating by twon notches, just two levels above junk status and arguably setting the stage for an Italian 10-year bond auction which is due later this morning," added Dhalla.
"Thus, once again, traders have little hope for a sustained period of optimism.
"It could be argued that unsustainable bond yields from some eurozone nations, faltering rates of growth from export giants like the US and China will be enough for bulls to only enjoy a short stay within the markets whilst the bears build ammunition for a swift return."
However, Gekko Global Markets trader Anita Paluch argued that the Moody's downgrade was not a huge surprise.
"The most recent Italy's surprise downgrade by Moody's also did not shake the markets massively as the reasons for the move are not new either," she noted.