Volkswacht Bodensee - Stocks diverge as traders weigh US inflation, Trump pharma tariff

The dollar dropped ahead of the Federal Reserve's preferred gauge of inflation -- the personal consumption expenditure (PCE) index -- with traders keenly seeking clues on how much further the US central bank could cut interest rates this year.

Official data Thursday showing faster-than-expected US economic growth in the second quarter dampened slightly expectations of a Fed cut next month, which would follow on from its September reduction, the first this year.

"On the surface, strong GDP should be good news but the problem is, such strong growth doesn't support further Federal Reserve rate cuts, and it could even boost inflation expectations on top of potential tariff-led pressures," noted Swissquote Bank senior analyst Ipek Ozkardeskaya.

Trump's announcement Thursday of steep new tariffs on medicines and other goods drew pushback from some allies, with the European Union claiming immunity for its pharmaceutical industry under a bilateral trade deal.

A 100-percent levy on pharmaceuticals, starting October 1, is the harshest trade policy by the president since April's shock unveiling of "reciprocal" tariffs on virtually every US trading partner across the globe.

In reaction, share prices of Asian pharma firms largely fared worse compared with European peers.

Shanghai Fosun shed around six percent and South Korea's Daewoong was off more than three percent. Japan's Daiichi Sankyo and Astellas Pharma were also well in the red.

Sydney-listed CSL shed nearly two percent, while Sun Pharmaceutical Industries was a major loser in India.

Key industry player India "could be spared" from the levies for now, however, according to MUFG bank analyst Michael Wan.

"It is still unclear how branded or patented pharmaceutical products will be defined, but our working assumption is that this will not incorporate generic drugs and pharmaceuticals shipped by the likes of India to the US," he wrote in a client note.

Shares prices of British pharma giants GSK and AstraZeneca were both rising in London midday deals, with both companies having recently announced major investment plans in the United States.

- Key figures at around 1045 GMT -

London - FTSE 100: UP 0.3 percent at 9,243.75 points

Paris - CAC 40: UP 0.4 percent at 7,821.61

Frankfurt - DAX: UP 0.3 percent at 23,596.41

Tokyo - Nikkei 225: DOWN 0.9 percent at 45,354.99 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 26,128.20 (close)

Shanghai - Composite: DOWN 0.7 percent at 3,828.11 (close)

New York - Dow: DOWN 0.4 percent at 45,947.32 (close)

Euro/dollar: UP at $1.1669 from $1.1658 on Thursday

Pound/dollar: UP at $1.3347 from $1.3335

Dollar/yen: UP at 149.89 yen from 149.81 yen

Euro/pound: DOWN at 87.41 pence from 87.42 pence

Brent North Sea Crude: DOWN 0.1 percent at $68.52 per barrel

West Texas Intermediate: DOWN 0.1 percent at $64.90 per barrel

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D.Schaer--VB