Europe's main stock markets advanced on Friday, with London boosted by British state-rescued bank Lloyds' forecast of a return to profit in 2010 after two years of losses.

In late morning trade, London's benchmark FTSE 100 index gained 0.63 percent to 5,678.21 points, the Paris CAC 40 added 0.41 percent to 3,954.42 points and Frankfurt's DAX 30 climbed 0.20 percent to 6,024.20 points.

The Stoxx 50 index of top eurozone shares was up 0.36 percent to 2,923.86 points.

In foreign exchange deals, the euro fell against the dollar as investors sought the safe-haven US unit amid uncertainty about international assistance for debt-plagued Greece.

The European single currency fell as low as 1.3560 dollars, down from 1.3603 late in New York on Thursday.

In London, Lloyds Banking Group shares jumped 9.25 percent to 60.69 pence.

"A bullish statement from Lloyds regarding a speedy return to profitability is helping drive renewed confidence in the banking sector," said IG Index analyst Philip Gillett.

Partly-nationalised Lloyds forecast that it will return to profitability in 2010 and reported strong business in the first few months of the year.

"In the first 10 weeks of 2010, the group's trading performance has been strong and we are pleased with the group's performance against each area of recent guidance," Lloyds said in a trading update.

Lloyds, which is 41.3-percent owned by the British government after a huge bailout, suffered a loss of 6.3 billion pounds last year as bad debts soared 60 percent following the takeover of former rival HBOS.

The loss, equivalent to 7.0 billion euros or 9.6 billion dollars, was an improvement from the shortfall of 6.7 billion pounds faced in 2008.

"Overall ... the group believes that it will be profitable on a combined businesses basis in 2010," it added.

In Asian earlier Friday, Hong Kong added 0.19 percent and Tokyo gained 0.75 percent in subdued trade, helped by a bout of bargain-hunting and a stronger dollar.

Concerns that China could raise interest rates were eased slightly after the country's central bank drained billions out of the financial system instead.

The People's Bank of China said Thursday it took a massive 213 billion yuan (31.2 billion dollars) out of the financial system this week to tighten liquidity.

The move marked the largest weekly amount of money taken out in two years, analysts said.

Wall Street ended mixed on Thursday as fresh jobs and inflation data highlighted a fragile economic recovery.

The Dow Jones Industrial Average rose 0.42 percent to 10,779.17 points, marking an eight-session winning streak that took the blue-chip index to almost 18-month highs.

Analysts said the market reacted to February data on consumer prices and weekly jobless insurance benefit claims that showed the economy continued to slowly regain strength after a brutal recession.