Stocks were little changed in volatile trading on Friday as a warning by Fitch it may cut ratings on some European nations offset gains in growth-related shares.

Major U.S. stock indexes, highly correlated to the performance of the euro, were well off their session highs as the euro fell after Fitch warned of the risk of recession in euro zone countries, including Germany.

The ratings agency also affirmed France's AAA rating but revised its outlook to negative, which usually means a downgrade is possible in 12-18 months.

I think it is wrong, but there is a false sense of security about the U.S. economy and optimism that the recent spate of reasonably OK economic data will allow us to avoid a recession here, said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.

The Nasdaq composite index performed relatively better as stocks tied to growth, including technology, gained. Shares of Adobe Systems Inc jumped 6.2 percent to $28.11 after results from the maker of Photoshop and Acrobat software beat Wall Street projections.

The Dow Jones industrial average <.DJI> was down 18.69 points, or 0.16 percent, at 11,850.12. The Standard & Poor's 500 Index <.SPX> was up 1.88 points, or 0.15 percent, at 1,217.63. The Nasdaq Composite Index <.IXIC> was up 12.86 points, or 0.51 percent, at 2,553.87.

U.S. financials <.GSPF>, which have underperformed the S&P 500 this week, were the strongest of the 10 top sectors in the benchmark index, up 0.6 percent. Credit card company Discover Financial added 3.9 percent to $23.98 a day after posting strong results and raising its dividend.

Blue chips underperformed compared with the overall market. The S&P 500's more defensive sectors also lagged.

Online game maker Zynga Inc shares opened 10 percent above their initial public offering price of $10 per share but rolled back showing that investors were concerned about the Farmville maker's dependence on Facebook. Shares hit a session low of $9 and were last trading near $9.25.

U.S. consumer prices were flat in November as Americans paid less for cars and gasoline, while the 12-month inflation reading fell for the second straight month, which could give the Federal Reserve more room to help a still-weak economy.

Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis, said subdued inflation will be a long-term positive as consumers benefit from contained prices.

That's one of the reasons you're seeing better consumer (confidence) of late, he said.

Research In Motion Ltd posted a sharp drop in profit on Thursday, offered a dismal outlook for BlackBerry shipments during the holidays and delayed an overhaul of its smartphones. The U.S.-traded stock dropped 11.8 percent to $13.34.

Data this week suggested a strengthening U.S. economic recovery, giving further support to equities.

Jobless claims fell to a 3-1/2-year low last week and factory activity in parts of the Northeast picked up in December, data showed Thursday.

(Reporting by Angela Moon; Editing by Kenneth Barry)

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