San Francisco Frontiers - Stock markets mostly rally on US debt deal hope

Frankfurt, London and Paris pushed higher around the half-way stage and after a largely buoyant Asian session, although Hong Kong and Shanghai slid on Chinese economic worries.

The dollar declined and oil prices advanced.

"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.

- Upbeat -

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.

In his most upbeat remarks yet on the high-stakes standoff, Republican House Speaker Kevin McCarthy said: "We're not there -- we haven't agreed to anything yet -- but I see the path (where) we could come to an agreement."

McCarthy secured the Speaker's gavel in January by pledging to his party's ultra-conservative Freedom Caucus that any raise in the borrowing limit would only come with an evisceration of the federal budget.

He and Democratic Senate Leader Chuck Schumer were planning to call for a vote in the coming days, and on Friday, a White House official said "steady progress" was being made.

The optimism was shared by other lawmakers, with Texas Republican Kay Granger saying a deal was "close". And Democrat Steny Hoyer said: "I think we are going to get a deal".

But McCarthy ally Patrick McHenry, chairman of the US House Financial Services Committee, warned the two sides were "not close to being done".

Still, all three main indices on Wall Street jumped Thursday to extend Wednesday's bumper gains.

In Asia Friday, Tokyo raced higher again, building on a recent surge in the Nikkei to a three-decade high even as data showed Japanese inflation continued to sit well above the central bank's target, adding to pressure for it to tighten monetary policy.

Sydney, Seoul, Singapore, Mumbai, Taipei, Manila, Wellington and Jakarta were also well up.

But Hong Kong sank more than one percent owing to a sharp drop in tech firms after ecommerce titan Alibaba reported below-par earnings that reinforced concerns about China's stuttering economy and consumer demand.

Shanghai also fell, and traders are keeping an eye on the central People's Bank of China to see if it unveils any fresh stimulus measures following a string of below-forecast economic figures.

Investors are also keeping watch on Japan, where G7 leaders are meeting to discuss a range of issues including trade, China and Russia.

- Key figures around 1050 GMT -

London - FTSE 100: UP 0.4 percent at 7,772.10 points

Frankfurt - DAX: UP 0.6 percent at 16,255.07

Paris - CAC 40: UP 0.6 percent at 7,492.17

EURO STOXX 50: UP 0.6 percent at 4,395.52

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)

New York - Dow: UP 0.3 percent at 33,535.91 (close)

Euro/dollar: UP at $1.0793 from $1.0770 on Thursday

Pound/dollar: UP at $1.2430 from $1.2409

Dollar/yen: DOWN at 138.27 yen from 138.71 yen

Euro/pound: UP at 86.86 pence from 86.80 pence

Brent North Sea crude: UP 1.2 percent at $76.74 per barrel

West Texas Intermediate: UP 1.1 percent at $72.67 per barrel

burs-rfj/bcp/giv

O.Anderson--SFF