Volkswacht Bodensee - Stock markets waver after US wholesale inflation data

Wholesale prices in the United States picked up in July on a surge in services costs, according to government data released Friday.

Producer prices rose by 0.3 percent from June to July, after a flat reading in the month before, the Labor Department said.

While producer prices have come down rapidly since last year, progress has been slower in consumer inflation.

"The Producer Price Index for July was hotter than expected at the headline level, but not really too hot after accounting for downward revisions for June," Patrick O'Hare from Briefing.com said.

"The key takeaway from the report is that wholesale inflation has come down sharply from its peak in 2022, although with the recent increase in oil and gasoline prices, there will be some concern that further improvement is going to be delayed."

It came hard on the heels of other US and UK data pointing to the possibility of more interest-rate hikes this year.

On Wall Street, shares rose after rebounding from early losses in the session. European stocks ended the trading week firmly in the red.

- 'On track for soft-landing' -

In Britain, better-than-expected growth data Friday increased the likelihood of more interest rates tightening by the Bank of England, briefly boosting the pound.

Gross domestic product grew 0.2 percent in the April to June period thanks to strong output in June and despite inflation remaining high, the Office for National Statistics said in a statement.

"Today's GDP data helps build on the idea that the UK could be on track for a soft-landing akin to that currently being seen in the US," Joshua Mahony, chief market analyst at Scope Markets, said.

"However, that soft-landing narrative also brings with it the potential for a more protracted period of tightening, with the Bank of England under no pressure to ease off on its current path of higher interest rates."

In the United States, consumer prices rose last month more than in June but by less than forecast, giving the Fed room to take a lighter touch with monetary policy after more than a year of rate hikes.

While there is a broad expectation that policymakers will hold off on lifting borrowing costs at next month's meeting, analysts said there was still a chance they could do so soon after.

"The (inflation) data... keeps alive the possibility of a further possible hike later in the year given the tightness in the labour market," said National Australia Bank's Tapas Strickland.

In Asian stock market trading, Hong Kong extended the week's losses Friday, even as e-commerce titan Alibaba surged on a forecast-busting rise in revenue.

Tokyo was closed for a public holiday.

Oil prices rose as the International Energy Agency hiked its forecast for global oil demand growth this year despite weakness in the Chinese economy.

"Oil prices have risen more than 20 percent since late June, buoyed by the actions of OPEC+ and the unilateral additional cuts by Saudi Arabia and Russia, both of which have been extended to September," Craig Erlam, senior market analyst at Oanda said.

- Key figures around 1545 GMT -

London - FTSE 100: DOWN 1.2 percent at 7,524.16 points (close)

Frankfurt - DAX: DOWN 1.03 percent at 15,832.17 (close)

Paris - CAC 40: DOWN 1.3 percent at 7,340.19 (close)

EURO STOXX 50: DOWN 1.4 percent at 4,321.33

New York - Dow: UP 0.1 percent at 35,211.09

Hong Kong - Hang Seng Index: DOWN 0.9 percent at 19,075.19 (close)

Shanghai - Composite: DOWN 2.0 percent at 3,189.25 (close)

Tokyo - Nikkei 225: Closed for a holiday

Euro/dollar: DOWN at $1.0955 from $1.0983 on Thursday

Pound/dollar: UP at $1.2693 from $1.2676

Euro/pound: DOWN at 86.32 from 86.62 pence

Dollar/yen: UP at 144.93 yen from 144.77 yen

Brent North Sea crude: UP 0.5 percent at $86.86 per barrel

West Texas Intermediate: UP 0.5 percent at $83.32 per barrel

S.Keller--BTB