Volkswacht Bodensee - Stock markets turn lower as trade deal rally fades

Equities have enjoyed a strong run for much of July on expectations that governments will reach agreements with the United States to pare Donald Trump's threatened tariffs before next Friday's deadline.

Sentiment was lifted earlier in the week by the announcement of a Japan-US deal, as well as signals that the European Union could be nearing its own agreement with Washington.

The "momentum has not been kept up, and European stocks are weaker at the end of the week," said Kathleen Brooks, research director at trading group XTB.

London and Frankfurt stock markets both fell on Friday, while Paris edged up.

Trade optimism stayed cautiously upbeat, as Brussels and Washington appear close to a deal that would halve Trump's threatened 30 percent levy, with a European Commission spokesman saying he believed an agreement was "within reach".

However, "there has been no confirmation from the US side... thus, sentiment towards European assets could be fragile as we lead up to that August 1 tariff deadline," Brooks added.

The EU is still forging ahead with contingency plans in case talks fail, with member states approving a 93 billion-euro ($109 billion) package of counter-tariffs.

With few positive catalysts to drive buying, Asian markets turned lower heading into the weekend.

Tokyo retreated after a two-day rally and Hong Kong declined following five days of gains. Shanghai was also down.

While the S&P 500 and Nasdaq hit new records Thursday, another round of strong jobs data suggested the Federal Reserve might have to delay cutting borrowing costs.

The dollar extended gains against its major peers as investors trimmed their rate forecasts.

The US president once again pressed Fed chief Jerome Powell to slash interest rates during a visit to its headquarters on Thursday.

In corporate news, German auto giant Volkswagen said US tariffs had cost it 1.3 billion euros in the first half of the year as it reported falling profit.

After an initial drop, shares in the carmaker were up more than three percent by midday in Frankfurt.

German sportswear maker Puma saw its shares tumble around 18 percent after slashing its sales forecast and warning of a full year loss.

While UK bank NatWest topped the gainers list on the FTSE 100, rising two percent after reporting a rise in second-quarter net profit and lifting its full-year outlook.

- Key figures at around 1055 GMT -

London - FTSE 100: DOWN 0.4 percent at 9,104.69 points

Paris - CAC 40: UP 0.1 percent at 7,824.21

Frankfurt - DAX: DOWN 0.6 percent at 24,143.85

Tokyo - Nikkei 225: DOWN 0.9 percent at 41,456.23 (close)

Hong Kong - Hang Seng Index: DOWN 1.1 percent at 25,388.35 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,593.66 (close)

New York - Dow: DOWN 0.7 percent at 44,693.91 (close)

Dollar/yen: UP at 147.79 yen from 146.94 yen on Thursday

Euro/dollar: DOWN at $1.1732 from $1.1756

Pound/dollar: DOWN at $1.3458 from $1.3507

Euro/pound: UP at 87.16 pence from 87.01 pence

West Texas Intermediate: UP 0.3 percent at $66.21 per barrel

Brent North Sea Crude: UP 0.2 percent at $68.52 per barrel

W.Huber--VB