European markets closed little changed Friday while Wall Street was largely flat as investors waited on a widely expected US interest rate cut to give a clear lead.
Continued uncertainty about the US-China trade stand-off despite some positive commentary added to the sense of caution after interest rate speculation drove sharp gains in Asian trade.
The main focus initially was on comments by John Williams, the influential vice chairman of the Fed's policy-setting board, who said central banks should move quickly to support the economy even when borrowing costs were already low.
He pointed to studies suggesting that when there are few stimulus options available, officials should "move more quickly than you otherwise might," rather than waiting "for disaster to unfold".
While a spokesman later clarified that Williams was not outlining Fed policy and was not flagging a half-point cut, analysts said the remarks provided an insight into how officials were thinking.
Markets have been wavering this week over how big the Fed's expected reduction would be, with 25 basis points priced in but some traders hoping for 50.
Capital Economics said in a research commentary that central banks generally are signalling an easing in monetary policy so as to offset a slowing economy but that may not be enough for stocks.
"We have been here before... The assumption that central banks will prevent much economic damage has sometimes supported equities for a surprisingly long time, before a correction further down the line once it became clear that economic weakness would last," it said.
"Even though we are not forecasting a downturn anywhere close to the financial crisis, we do think that the likely scale of further weakness in the global economy is being widely underestimated."
- Oil rallies -
Oil was firmer but then slipped back off early highs made as the United States and Iran continued to trade brickbats, with President Donald Trump saying a US navy vessel downed an Iranian drone in the strategic Strait of Hormuz, a claimed strongly denied by Tehran.
"With the situation... turning into a powder keg again, Brent crude prices will remain propped up," noted Fiona Cincotta, an analyst at City Index trading group.
On the corporate front, the world's leading brewer AB InBev said it was selling its Australian unit Carlton & United Breweries for 16 billion Australian dollars (US$11.3 billion).
AB InBev, a Belgian-Brazilian behemoth that owns brands such as Stella Artois and Budweiser, is saddled with more than $100 billion in debt from previous acquisitions and so the news gave the shares a sharp boost of more than five percent.
- Key figures around 1600 GMT -
London - FTSE 100: UP 0.2 percent at 7,508.70 points (close)
Frankfurt - DAX 30: UP 0.3 percent at 12,260.07 (close)
Paris - CAC 40: FLAT at 5,552.34 (close)
EURO STOXX 50: FLAT at 3,482.97
New York - Dow: FLAT at 27,251.07
Tokyo - Nikkei 225: UP 2.0 percent at 21,466.99 (close)
Hong Kong - Hang Seng: UP 1.1 percent at 28,765.40 (close)
Shanghai - Composite: UP 0.8 percent at 2,924.20 (close)
Euro/dollar: DOWN at $1.1221 from $1.1277 at 2050 GMT
Pound/dollar: DOWN at $1.2504 from $1.2548
Dollar/yen: UP at 107.70 yen from 107.30 yen
Brent North Sea crude: UP 0.2 percent at $62.07 per barrel
West Texas Intermediate: DOWN 0.2 percent at $55.30 per barrel