Volkswacht Bodensee - Stocks push higher as inflation eases

The Dow added 0.7 percent in late morning trading, while the broader S&P 500 climbed 1.1 percent and the tech-heavy Nasdaq 100 jumped 1.9 percent.

This came after data showed that the Federal Reserve's preferred gauge of inflation, the personal consumption expenditures price index, rose 3.0 percent last month from June 2022.

The figure was down from a 3.8 percent rise in May, extending a downward trend.

The benchmark is still above the central bank's two percent target over the longer run, "yet the Fed is bound to take some solace from the recognition that it continues to move in the right direction," said Briefing.com analyst Patrick O'Hare.

Stock markets have enjoyed a broadly positive week on hopes the US Federal Reserve and other central banks were at or close to the end of more than a year of monetary tightening as inflation comes down.

The Fed on Wednesday said that future rate decisions would be determined by data, which was welcomed by investors who saw recent indicators -- pointing to an easing of price pressure and softening of the labour market -- as giving it room to hold off more increases.

And on Thursday, European Central Bank boss Christine Lagarde left open the possibility of a pause in rate hikes.

Paris stocks edged 0.2 percent higher on Friday after data showed the French economy grew a forecast-busting 0.5 percent in the second quarter, while inflation eased in July.

Frankfurt added 0.4 percent, setting another record close, on slowing inflation despite data showing the German economy stagnated in the second quarter.

"With price pressures in Germany also slowing more than expected in July there is a sense that this week’s rate hike by the ECB may well have been its last, with a number of ECB policymakers expressing increasing caution over the growth outlook," said analyst Michael Hewson at CMC Markets.

The yen fluctuated Friday after Japan's central bank tweaked its ultra-loose monetary policy, while stocks markets traded mixed after forecast-beating US data revived concerns the Federal Reserve could hike interest rates further.

After a closely-watched meeting, the Bank of Japan (BoJ) said it would allow "greater flexibility" in government bond markets, having allowed them to move in a tight band in a process known as yields curve control.

But on Friday it said that while it would maintain that range, its upper and lower limits would be used as references, rather than being rigid.

The move means rates in Japan would be allowed to rise more than previously. The yen swung around after the announcement.

The currency has been hammered for more than a year as the BoJ refused to shift from its loose policy, even as central banks around the world pushed up interest rates to fight surging inflation.

However, with prices picking up at home and the yen struggling, pressure has been growing on the bank to change tack.

The Nikkei 225 index sank more than two percent on the prospect of higher borrowing costs before paring the losses by the close.

"Market reaction has been very choppy as it is not a straightforward decision to digest," said Khoon Goh, of Australia and New Zealand Banking Group.

Asian markets closed out the week mixed. Hong Kong and Shanghai were boosted by hopes for further measures by Beijing to boost the struggling Chinese economy.

- Key figures around 1330 GMT -

New York - Dow: UP 0.7 percent at 35,537.06 points

London - FTSE 100: FLAT at 7,694.27 (close)

Frankfurt - DAX: UP 0.4 percent at 16,469.75 (close)

Paris - CAC 40: UP 0.2 percent at 7,476.47 (close)

EURO STOXX 50: UP 0.4 percent at 4,466.50 (close)

Tokyo - Nikkei 225: DOWN 0.4 percent at 32,759.23 (close)

Hong Kong - Hang Seng Index: UP 1.4 percent at 19,916.56 (close)

Shanghai - Composite: UP 1.8 percent at 3,275.93 (close)

Dollar/yen: UP at 140.41 yen from 139.44 yen on Thursday

Euro/dollar: UP at $1.1030 from $1.0978

Pound/dollar: UP at $1.2860 from $1.2794

Euro/pound: UNCHANGED at 85.78 pence

West Texas Intermediate: FLAT at $80.09 per barrel

Brent North Sea crude: FLAT at $84.22 per barrel

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J.Bergmann--BTB