San Francisco Frontiers - Stock markets mixed awaiting key US rate decision

The dollar was higher against main rivals, while the Turkish lira sat around record lows against the greenback.

Newly re-elected President Recep Tayyip Erdogan appointed former Wall Street executive Hafize Gaye Erkan as central bank governor, signalling a possible shift in his unconventional policies to fight inflation.

Erkan, the first woman to head the Turkish central bank, is a former chief executive of US real estate finance firm Greystone, co-CEO of First Republic Bank and managing director at Goldman Sachs.

Oil prices steadied Friday at the end of a volatile week for the commodity following Saudi Arabia's decision to slash output.

Expectations that the Federal Reserve will hold off raising interest rates on Wednesday for the first time since starting its hiking cycle last year to combat high inflation have pushed equities higher for most of the month.

Market expectation was thrown off course, however, after the Bank of Canada's surprise lift and a similar move in Australia this week.

The Australian and Canadian central banks "are raising rates in part because they think the Fed will hike once more and if they fail to match this they risk" a weakening of their currencies, said analyst Krishna Guha at Evercore ISI.

Despite the rate rises elsewhere, analysts believe news of a forecast-busting jump in US jobless claims to the highest since October 2021 will cause the Fed to pause until next month.

All three main US indices ended higher Thursday, with the S&P 500 entering a bull market after rising more than 20 percent from its October low.

Analysts said a pick-up in industrial stocks indicated a broadening of the rally while others said the United States could even avoid a recession, which many had feared would happen because of the surge in interest rates over the past year.

Europe's leading stock markets were trading lower Friday, a day after official data showed the eurozone had fallen into recession.

- China stimulus talk -

Elsewhere, eyes are on China where there is growing speculation that authorities will unveil fresh stimulus measures to kickstart the world's number two economy, with the post-zero-Covid rally already fading.

Disappointing readings on manufacturing activity and trade this week have compounded the view that officials need to step in, with reports suggesting the People's Bank of China will cut interest rates soon.

Expectations were ramped up Thursday after a key government adviser said borrowing costs should come down to help struggling firms' financing ability.

The need for action was reinforced Friday by Chinese data showing consumer inflation essentially flat in May and wholesale prices falling more than expected.

"On the whole, the muted inflation environment may call into question the sustainability of the economic recovery, but it also provides a favourable backdrop for policymakers to roll out more policy support," said HSBC's Erin Xin.

- Key figures around 1045 GMT -

London - FTSE 100: DOWN 0.4 percent at 7,572.08 points

Frankfurt - DAX: DOWN 0.3 percent at 15,938.18

Paris - CAC 40: DOWN 0.3 percent at 7,198.74

EURO STOXX 50: DOWN 0.3 percent at 4,284.68

Tokyo - Nikkei 225: UP 2.0 percent at 32,265.17 (close)

Hong Kong - Hang Seng Index: UP 0.5 percent at 19,389.95 (close)

Shanghai - Composite: UP 0.5 percent at 3,231.41 (close)

New York - Dow: UP 0.5 percent at 33,833.61 (close)

Euro/dollar: DOWN at $1.0761 from $1.0785 on Thursday

Pound/dollar: DOWN at $1.2551 from $1.2560

Dollar/yen: UP at 139.63 yen from 138.89 yen

Euro/pound: DOWN at 85.74 percent from 85.82 pence

Brent North Sea crude: UP 0.1 percent at $76.03 per barrel

West Texas Intermediate: FLAT at $71.30 per barrel

Z.Phillips--SFF