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 European shares edged down from three-week highs, pegged back partly
by a rebound in the euro, but were still on track for their best
week in six, and Germany's DAX for its best week since January.
U.S. futures pointed to a slightly positive open on Wall Street
<SPc1>, after the S&P 500 <.SPX> hit an all-time high on Thursday.
A batch of soft manufacturing data on Thursday from the United
States, China and Germany pointed to sluggish global growth but
cemented investor hopes that central banks will keep stoking
activity.
Federal Reserve Chair Janet Yellen will take centre stage later on
Friday. Earlier this week Fed meeting minutes appeared to push the
timing of the first U.S. rate hike out to late 2015, while the ECB's
Benoit Coeure said the euro zone bank could increase its bond
purchases in the near term.
"There are chances of more rate cuts in China, the Fed is delaying
its rate hikes and Europe is treading a steady course so the risks
are on the limited side for the market," said ABN Amro Chief
Investment Officer Didier Duret.
"We are seeing the tail of the slowdown in the United States in the
first quarter, meaning it is probably the last set of data that are
rather negative."
By 1155 GMT the FTSEuroFirst 300 index was down 0.2 percent, with
luxury goods group Richemont falling on weak sales. Britain's
FTSE 100 was up 0.6 percent at its highest level in 10 days in the
wake of a better-than-expected improvement in UK public finances.
Earlier, Wall Street's record high helped China's main index to leap
nearly 3 percent to a fresh 7-year high, rounding off a weekly gain
of 8 percent, its strongest week this year. It has risen 45 percent
in only six weeks.
MSCI world equity index, which tracks shares in 45 countries, was up
0.2 percent at 443.54, close to a record high of 443.98 hit in
April.
BONDS STEADYING
U.S. inflation data for April is due at 1230 GMT. Muted price
pressures are expected to give the Fed more breathing space
regarding of the timing of what will be its first rate hike since
June 2006.
The U.S. economy's recovery has not been as robust as expected. U.S.
data released overnight appeared to vindicate the Fed officials'
cautious policy stance.
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With weaker-than-expected existing home sales, manufacturing sector
and U.S. Mid-Atlantic business activity, U.S. Treasury yields fell,
helping nudge the dollar away from recent highs.
The euro rose 0.6 percent to $1.1175, shrugging off data showing
German business morale deteriorated slightly in May for the first
time in seven months. It had hit a three-week low of $1.1062 earlier
this week amid Greek debt concerns and was poised to lose almost 2.5
percent on the week, snapping a five-week winning streak.
The dollar also eased slightly to 120.975 yen after scaling a
two-month peak of 121.49 midweek.
The benchmark 10-year German bond yield fell four basis points to
0.60 percent and the 10-year U.S. yield to 2.17 percent.
Analysts at Barclays noted "tentative" signs that the euro zone bond
market was stabilising after a rout that drove Bund yields to 0.80
percent from 0.05 percent. That high is unlikely to be retested any
time soon.
"Were financial conditions to tighten further, the ECB
could respond more forcefully," they said in a note on Friday.
Oil prices slipped on Friday as worries over the impact of war in
the Middle East on crude supplies were outweighed by reports of
profit-taking ahead of a long weekend. [O/R]
Brent was down 45 cents at $66.09 a barrel after closing up 2.3
percent on Thursday.
(Additional reporting by Marc Jonees in London and Saikat Chatterjee
in Hong Kong; Editing by Toby Chopra/Ruth Pitchford)
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