Volkswacht Bodensee - Europe stocks rally, Wall Street stalls

Frankfurt's DAX 40 index rose 0.7 percent to a record close of 16,275.38 points after punching through the 16,300 level during the session to hit an all-time high of 16,331.94.

Europe's gains followed a largely buoyant Asian session, although Hong Kong and Shanghai slid on Chinese economic worries.

Wall Street also opened higher as traders remained hopeful that US lawmakers will hammer out a deal to lift the debt ceiling and avert a confidence-shattering default.

But Wall Street's gains evaporated as the morning wore on, with the Dow down less than 0.1 percent in late morning trading. The S&P was flat and the Nasdaq Composite shed 0.2 percent.

Meanwhile, the yields on US Treasury bonds rose.

"Yields have also continued to move higher in the wake of this week’s repricing of a possible US rate rise at the June meeting, and ahead of scheduled comments from Fed chair Jay Powell later today," said CMC Markets analyst Michael Hewson.

"The US 2-year yield has risen to 3-month highs above 4.3 percent," he added.

The US dollar lost however ground against rival currencies ahead of an appearance of Federal Reserve Chief Jerome Powell at a panel discussion.

The US central bank has raised its benchmark lending rate 10 times in quick succession since last year as it looks to suppress demand to tackle inflation, which remains well above its long-run target of two percent.

But it indicated it will now decide its further action depending upon the latest data, raising the possibility of a pause at its June policy meeting.

However, several Fed monetary policymakers have spoken publicly that the current data point to another hike.

Briefing.com analyst Patrick O'Hare said if questioned on interest rates he believes Powell "will walk a neutral line that emphasizes the Fed being data dependent."

- 'Steady progress' -

Confidence that a deal will be reached to raise the US debt limit continued to support equities.

"Investors continue to respond positively to the optimistic discussions surrounding the debt-ceiling issue in Washington, which have bolstered market sentiment towards equities," noted ActivTrades analyst Pierre Veyret.

After weeks of lumbering talks on Capitol Hill, congressional leaders appeared ready to put a proposal to lawmakers before the government runs out of cash, said to be around June 1.

On Friday, a White House official said "steady progress" was being made in the talks.

Oil prices rebounded for much of the day, but again turned lower late in the session.

"Despite yesterday’s decline crude oil prices look set to post their first positive week in over a month, with this week’s announcement that the US will look at refilling the (Strategic Petroleum Reserve) by three million barrels between now and August at the start of the week helping to stop the rot," said CMC Markets' Hewson.

- Key figures around 1530 GMT -

New York - Dow: DOWN less than 0.1 percent at 33,510.31 points

London - FTSE 100: UP 0.2 percent at 7,756.87 (close)

Frankfurt - DAX: UP 0.7 percent at 16,275.38 (close)

Paris - CAC 40: UP 0.6 percent at 7,491.96 (close)

EURO STOXX 50: UP 0.6 percent at 4,395.30 (close)

Tokyo - Nikkei 225: UP 0.8 percent at 30,808.35 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 19,450.57 (close)

Shanghai - Composite: DOWN 0.4 percent at 3,283.54 (close)

Euro/dollar: UP at $1.0810 from $1.0770 on Thursday

Pound/dollar: UP at $1.2457 from $1.2409

Dollar/yen: DOWN at 137.67 yen from 138.71 yen

Euro/pound: DOWN at 86.78 pence from 86.80 pence

Brent North Sea crude: DOWN 0.7 percent at $75.32 per barrel

West Texas Intermediate: DOWN 1.0 percent at $71.18 per barrel

burs-rl/ach

O.Bulka--BTB