European shares were down around midday on Friday as banks and energy majors fell, offsetting gains made by the automobile sector.
By 1145 GMT, the pan-European FTSEurofirst 300 index of top shares was down 0.3 percent at 743.04 points after trading in a range of 740.04-747.30 points.
The benchmark index is down about 10.6 percent in 2009, but has risen 15.3 percent since reaching a floor on March 9, and is on track to record gains for a third straight week.
"We have a good chance that we are in the process of building a bottom. We can crumble back down and test the lows even, but a good chance is that we will not make new lows. Bottom patterns do take time," said Petra Vlnkerssenbrock, technical analyst at Commerzbank in Frankfurt.
European banks dragged the index lower with UBS, Nordea Bank , Societe Generale and Credit Suisse down 6.6-11.5 percent.
However, British banks made broad gains with Barclays up 8 percent on reports the bank may not need any fresh capital and Lloyds Banking Group 8.4 percent ahead.
Britain's financial regulator has concluded a "severe stress test" on Barclays and is satisfied the bank does not need any fresh capital.
Commerzbank rose 9.5 percent after the German bank said it would seek to refinance 20 billion euros of business this year.
The DJ Eurostox Banking index is up around 16 percent for the month, but is still down about 12 percent for the year.
"We are still in the overriding bear market. We see an improvement in the market and sentiment has improved," said Vlnkerssenbrock at Commerzbank.
Energy stocks weighed on the index as crude slipped below $54 a barrel, having touched a 2009 high in the previous session.
ENI, StatoilHydro, Total and BP were 0.1-2.6 percent lower.
AUTOS PREVAIL
Analysts said the auto sector was boosted by optimism from Asia after South Korea announced tax incentives and easier consumer financing to support its car industry.
Among the risers, Daimler, BMW, Peugeot and Fiat rose 2.5-5.3 percent.
Societe Generale also has raised its recommendation on the European auto sector to "overweight" from "neutral".
"After significant underperformance, the auto sector is ready to rebound and now is the right time to buy the auto sector," SocGen analysts said in a note.
Later in the session, investors will eye the University of Michigan Survey of Consumer Sentiment with economists polled by Reuters expecting a reading of 56.6 compared with 56.3 in the final February report.
Across Europe, the FTSE 100 index was flat, Germany's DAX was down 0.5 percent and France's CAC 40 was down 0.6 percent.
