European stocks pause after rally

Europe's stock markets steadied on Friday, as dealers paused for breath following the previous day's strong rally sparked by supportive comments from European Central Bank chief Mario Draghi. London's benchmark FTSE 100 index gained 0.17 percent to 5,582.60 points in morning trade with all eyes in the British capital for the start of the Olympic Games. The Paris CAC 40 added 0.20 percent to 3,213.56 points, while Frankfurt's DAX 30 dropped 0.24 percent to 6,568.01. In foreign exchange deals, the euro eased to $1.2276 from $1.2280 in New York late Thursday. Equities had surged Thursday after ECB chief Draghi pledged full support for the euro, easing tensions over the eurozone sovereign debt crisis ahead of the ban's interest rate meeting next Thursday. "European markets paused for breath on Friday after a strong rally in the previous session on confidence boosting rhetoric from Mario Draghi," said market strategist Joshua Raymond at traders City Index. "Some investors immediately moved to lock in yesterday's gains ahead of the weekend break." Asian stock markets closed higher and the euro held on to strong gains won overnight after Draghi said the ECB would do "whatever it takes" to save the under-pressure single currency. Draghi's pledge at an investment conference in London, sparked talk that the ECB would carry out additional bond buying to push yields lower in Spain. The eurozone debt crisis has intensified this week on fears that Spain will soon have to seek a full international bailout, similar to ones handed out to other members of the bloc -- Greece, Ireland and Portugal. There are also mounting concerns over Italy's nearly two trillion euro debt mountain. But on Friday Italy's borrowing costs dropped at an auction of six-month debt that raised 8.5 billion euros ($10.4 billion). The rate on the six-month bonds dropped to 2.454 percent from 2.957 percent at the last similar operation on June 27. The drop in borrowing costs "is due to Mario Draghi's intervention, which arrived at just the right moment," Cyril Regnat, bond specialist with the French bank Natixis, told AFP. "But will it last?" The next test will be a medium- to long-term bond sale on Monday, at which the treasury hopes to raise up to 4.75 billion euros in five and 10-year bonds. In Spain, the unemployment rate rose in the second quarter to 24.63 percent and a huge 53 percent among the young, despite the start of the tourist season. Investors are expected later Friday to switch their focus to the publication of second-quarter gross domestic product (GDP) growth data for the United States, the world's biggest economy. Market participants will seek clues on whether the US Federal Reserve will implement more so-called quantitative easing measures to stimulate the economy. "Today's major highlight looks to be the US second-quarter GDP, expected to have moderated to around 1.2 percent on the quarter annualised from 1.9 percent in the first quarter," said ETX Capital trader Ishaq Siddiqi. "However, with a string of poor releases out from the US over the last month, markets are preparing for a weaker than expected GDP number, which would for sure, heat up the calls for more QE by the Fed." In Asian trade, Hong Kong shares rallied 2.02 percent, Tokyo climbed 1.46 percent, Seoul soared 2.62 percent and Sydney finished 1.50 percent higher.