European stocks advanced Friday, with Frankfurt stocks hitting a record high, on confidence of a US debt ceiling deal, but the rally lost steam on Wall Street on news the negotiations had stalled.

Frankfurt's DAX 40 index rose 0.7 percent to a record close of 16,275.38 points after punching through the 16,300 level during the session to hit an all-time high of 16,331.94.

Europe's gains followed a largely buoyant Asian session, although Hong Kong and Shanghai slid on Chinese economic worries.

Wall Street also opened higher, but went negative in late morning on reports that Washington talks had hit a speed-bump.

The broad-based S&P 500 finished 0.1 percent lower.

Briefing.com analyst Patrick O'Hare said the modesty of the losses represents "an expression of the market's underlying belief that something will eventually get done without a default."

Republicans continue to insist Biden must sign up to spending cuts in exchange for their support to raise the debt ceiling, ignoring repeated Democratic calls for a "clean" increase of the borrowing limit with no strings attached.

On Friday, the White House said significant problems remained between the two sides over the budget.

"There are real differences between the parties on budget issues and talks will be difficult," a White House official said in a statement, adding: "the President's team is working hard towards a reasonable bipartisan solution that can pass the House and the Senate."

Oil prices rebounded for much of the day, but again turned lower late in the session on worries about the US debt ceiling talks.

Among individual stocks, Foot Locker plummeted more than 27 percent as it reported a 73 percent drop in quarterly earnings to $36 million and warned that sales "softened meaningfully given the tough macroeconomic backdrop," forcing "aggressive" markdowns.