Volkswacht Bodensee - Stocks firm, dollar drops at end of rocky week

Investors have been on edge after Moody's stripped the United States of its top-tier credit rating and the House of Representative approved President Donald Trump's tax cut plan, which critics say would add to the country's debt pile.

A tepid auction of 20-year Treasuries on Wednesday ramped up those concerns, dealing a blow to stocks that had just recovered from the April fireworks of Trump's tariff blitz.

Still, sentiment stabilised on Thursday, with bond yields pulling back after the Republican-led House narrowly passed Trump's "One Big, Beautiful Bill Act", which shrinks social safety net programmes to pay for a 10-year extension of his 2017 tax cuts.

"The tax bill won't lead to default but it means more debt and the markets are cagey about this and about the US economy," said Neil Wilson, UK investor strategist at Saxo Markets.

"Stock markets are in wait-and-see mode for the moment after Wednesday's sharp pullback," he added.

A mixed showing Thursday on Wall Street was followed by slightly better performances Friday in Asia and Europe, which was boosted by news that Germany's economy grew more than previously thought at the start of 2025.

Trump's tax package, which now goes to the Senate, had faced scepticism from fiscal hawks who fear the country is headed for bankruptcy.

Independent analysts warn it would increase the deficit by as much as $4 trillion over a decade.

But the White House insists it will spur growth of up to 5.2 percent, ensuring it adds nothing to the $36 trillion national debt -- growth projections that are well outside the mainstream consensus.

There is a feeling that "perhaps the fiscal worries have gone a bit too far", said Chris Weston, analyst at broker Pepperstone.

"Many have crunched the numbers on the tax bill and see the raft of measures to not be overly stimulatory and to therefore result in a major blowout of the deficit in 2026 and 2027 and is, in fact, quite neutral in its effect."

The drop in Treasury yields -- suggesting improving demand for US debt -- was helped by upbeat data on the American jobs market, home sales and factory activity, suggesting the country's economy remained healthy.

- Key figures at around 1020 GMT -

London - FTSE 100: UP 0.1 percent at 8,748.08 points

Paris - CAC 40: DOWN 0.5 percent at 7,824.16

Frankfurt - DAX: UP 0.2 percent at 24,041.23

Tokyo - Nikkei 225: UP 0.5 percent at 37,160.47 (close)

Hong Kong - Hang Seng Index: UP 0.2 percent at 23,601.26 (close)

Shanghai - Composite: DOWN 0.9 percent at 3,348.37 (close)

New York - Dow: FLAT at 41,859.09 (close)

Euro/dollar: UP at $1.1356 from $1.1281 on Thursday

Pound/dollar: UP at $1.3499 from $1.3419

Dollar/yen: DOWN at 143.27 yen from 143.99 yen

Euro/pound: UP at 84.12 pence from 84.07 pence

Brent North Sea Crude: UP 0.1 percent at $64.35 per barrel

West Texas Intermediate: UP 0.2 percent at $61.10 per barrel

T.Suter--VB