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European markets look for direction

European stock markets were looking for direction Friday as investors digested data showing the euro zone has emerged from recession but that France and Germany's recovery was slower than most analysts expected.

Meanwhile, shares in British Airways and Iberia rose after they confirmed their planned merger.

In morning trading in Europe, Britain's FTSE 100 added 0.1 per cent to 5,279.62, Germany's DAX climbed 0.2 per cent to 5,672.23 and France's CAC 40 slipped 0.3 per cent to 3,796.85.

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Asian markets closed mixed amid investor uncertainty about the global outlook after Wall Street fell Thursday on weak energy demand. Markets in Tokyo and Seoul declined, while Hong Kong and China gained. Major U.S. indexes slid by about 1 per cent Thursday and were expected to rise slightly on the open.

Official figures Friday showed the euro zone's economy grew by 0.4 per cent in the third quarter, meaning the 16-country euro area has joined the United States and Japan out of recession. However, the rise in output was not as big as most economists had been predicting, as growth in major economies, such as Germany and France, fell short of expectations.

Germany and France continued their economic recovery in the third quarter on a rise in exports, after technically emerging from recession in the previous three months. Germany's growth accelerated to 0.7 per cent - just short of economists' forecast of 0.8 per cent. The preliminary estimate was still the strongest since the first quarter of 2008.

France's growth remained at 0.3 per cent, the same as in the second quarter. Analysts were disappointed, however, as private spending was stagnant and fixed investment continued to fall.

The U.S. dollar fell on Friday, paring some of the previous day's gains, while the euro garnered support from the data showing the euro zone pulled out of recession in the third quarter.

The euro also benefited from falls in the dollar, which pared some of the previous day's gains following a bout of profit-taking in perceived riskier currencies, with most in the market believing the trend towards a weaker dollar remains intact.

Gold rose on Friday, hovering below the previous session's record high and building a base above $1,100 an ounce as the dollar edged lower and analysts predicted further losses in the currency,

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Bullion has hit record highs for six out of the past eight sessions, touching an all-time peak of $1,122.85 on Thursday on the view the dollar would remain weak.

Spot gold was at $1,106.65 per ounce at 1102 GMT, up 0.3 per cent from New York's notional close of $1,103.60.

Oil prices crept above $77 a barrel Friday as the weaker dollar, which makes crude cheaper for international investors, offset doubts about U.S. crude demand.

By early afternoon in Europe, benchmark crude for December delivery, which earlier fell to as low as $76, was up 48 cents to $77.42 a barrel in electronic trading on the New York Mercantile Exchange. The contract gave up $2.34 to settle at $76.94 on Thursday.

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