Volkswacht Bodensee - Stock markets mostly advance on easing US recession fears

Reaction to the figures released Thursday was in marked contrast to separate US employment numbers a week ago that triggered massive selling across markets on Monday.

Since then, equities have seen big fluctuations as traders seek to get on hold of the economic outlook for the United States and elsewhere.

"A drop in jobless claims helped alleviate recession fears," noted Mark Haefele, chief investment officer at UBS Global Wealth Management.

"Markets are now eyeing upcoming (US) inflation and retail sales data, which could lead to future volatility."

Wall Street rallied Thursday having endured sharp losses as the week began.

Recent trading sessions have been dominated also by sharp swings for the yen against the dollar, with the Bank of Japan indicating that it is done for now on raising rates and amid uncertainty over the pace of cuts to US borrowing costs.

Both currencies stabilised Friday. In commodities trading, oil prices rose slightly.

Data Thursday showed fewer people than forecast applied for US unemployment benefits last week, tempering worries about the economy.

"Despite the volatility in claims data, especially around this time of year, the data helped allay fears of a more rapid deterioration in the labour market," said National Australia Bank's Taylor Nugent.

Last week's US non-farm payrolls report came in well below forecast, triggering turmoil on markets.

Traders are now awaiting the release of next week's US inflation data as they attempt to judge the Federal Reserve's plans for interest-rate cuts.

Slowing prices and a softening labour market have ramped up bets on at least one US rate reduction before January.

In China meanwhile, data Friday showed consumer inflation rose more than expected in July to hit a five-month high, providing some much-needed positive news on the world's number-two economy.

China endured a period of deflation between October to January, when sliding prices of goods and services heightened worries of an economic slowdown.

- Key figures around 1045 GMT -

London - FTSE 100: UP 0.5 percent at 8,185.35 points

Paris - CAC 40: UP 0.5 percent at 7,285.07

Frankfurt - DAX: UP 0.3 percent at 17,740.14

EURO STOXX 50: UP 0.4 percent at 4,685.10

Tokyo - Nikkei 225: UP 0.6 percent at 35,025.00 (close)

Hong Kong - Hang Seng Index: UP 1.2 percent at 17,090.23 (close)

Shanghai - Composite: DOWN 0.3 percent at 2,862.19 (close)

New York - Dow: UP 1.8 percent at 39,446.49 (close)

Euro/dollar: UP at $1.0922 from $1.0921 on Thursday

Pound/dollar: UP at $1.2754 from $1.2750

Dollar/yen: DOWN at 147.16 yen from 147.20 yen

Euro/pound: UP at 85.64 pence from 85.63 pence

Brent North Sea Crude: UP 0.2 percent at $79.33 per barrel

West Texas Intermediate: UP 0.3 percent at $76.45 per barrel

S.Gantenbein--VB