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 The MSCI World Index <.WORLD> touched its highest level since Aug.
21 as the pan-European FTSEurofirst 300 <.FTEU3> rose 0.4 percent,
its second day on the up and reversing losses made earlier in the
week after disappointing data from China.
The global share index has gained 6 percent so far in October and is
set for its best month since 2011 after sharp losses over the
summer.
Data from Bank of America/Merrill Lynch showed that equity and bond
funds both recorded inflows for first time in 10 weeks, which the
bank said signaled a turn in sentiment following several tumultuous
months.
U.S. stock futures <ESc1> were down 0.1 percent ahead of the cash
market open, with investors wary of making big bets either way ahead
of Chinese growth data due on Monday.
Asian and European shares tracked Thursday's gains in U.S. stocks,
which followed data showing new applications for unemployment
benefits fell back to a 42-year low last week. That suggests the
U.S. labor market remains strong even though recent jobs data
releases have sent mixed signals.
Core inflation data also showed some signs that price pressures are
beginning to build up again. The Federal Reserve seems to be in no
rush to raise U.S. interest rates, however, with policymakers
expressing concern that a China-led slowdown in the global economy
might pose a threat to the U.S. outlook.
"(The employment) report should be reassuring to markets which have
been on edge over global disinflation risks," strategists at BNP
Paribas said in a note.
"It helps keep the possibility of a move (in interest rates) at the
end of this year alive, although our central scenario remains for a
delay until at least March 2016."
Rekindled rate-hike expectations lifted the dollar. The dollar index
<.DXY>, which values the greenback against a basket of six major
counterparts, was up 0.3 percent at 94.624.
The dollar rose 0.1 percent to buy 118.96 yen <JPY=> after pulling
away from a seven-week trough of 118.065 struck overnight but was
still poised to lose 1 percent this week.
The data and the stronger dollar pushed gold off a 3-1/2-month high.
On Wall Street, earnings from the likes of Honeywell <HON.N>, which
beat profit forecasts, were in focus. With 10 percent of S&P 500
companies having reported quarterly earnings, 78 percent have beaten
or met expectations, according to Thomson Reuters Starmine data.
Chinese stocks rose to seven-week highs, pushing main indexes to
their strongest weekly performance in 4-1/2 months after data showed
Chinese loans surged in September.
Investors remained cautious before data on Monday that is forecast
to show the world's second-largest economy grew by 6.5 percent in
the third quarter, falling below 7 percent for the first time since
the global financial crisis.
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MSCI's broadest index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> edged 0.2 percent higher and Japan's Nikkei stock
index <.N225> was up 1.1 percent.
Annual inflation in the euro zone turned negative in September due
to sharply lower energy prices, data confirmed on Friday,
maintaining pressure on the European Central Bank to increase its
asset purchases to boost prices.
The latest Reuters survey of over 60 economists showed euro zone
inflation averaging 0.1 percent this year, rising to 1.1 percent in
2016 and 1.6 percent in 2017 -- still below the ECB's target of just
under 2 percent.
"The medium-term prognosis is probably as weak as it has been since
(ECB President Mario) Draghi started QE," said Simon French, chief
economist at Panmure Gordon, adding that recent euro strength had
complicated his task further.
The euro was slightly lower at $1.1353 <EUR=>, down from a
seven-week peak of $1.1495 scaled the previous day when ECB
governing council member Ewald Nowotny said it was "obvious" the ECB
must seek more ways to stimulate the euro zone economy. The euro was
on track to end the week effectively flat.
Spain's government bond yields fell as expectations mounted that
Moody's will upgrade its credit rating, as Standard & Poor's did on
Oct. 2. [D:nL8N12G12D]
London copper eased from near a one-month peak on Friday as
incremental cuts to mine supply failed to revive prices given weak
demand.
Oil prices snapped a week-long decline that pushed prices down
nearly 10 percent, with some investors pinning hopes on forecasts of
falling U.S. shale oil production.
U.S. crude <CLc1> was up 0.8 percent at $46.75 a barrel, after
shedding 0.6 percent on Thursday. Brent <LCOc1> added 0.5 percent to
$49.98.
(Additional reporting by Kit Rees; Editing by Catherine Evans)
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