San Francisco Frontiers - Stock markets mixed as rate hopes play against China fears

The mood across trading floors has been generally positive of late, with last week's news that US inflation had slowed more than expected coming alongside healthy data suggesting a recession could also be avoided.

Sentiment was further boosted this week by data showing UK inflation cooling more than expected.

The figures have fanned hopes that the long-running campaign of rate hikes was kicking in and policymakers in Washington and London could tap the brakes.

Comments from a top European Central Bank official this week indicated a similar outlook in Frankfurt.

The Fed is tipped to lift rates at its meeting next week but expectations are that it will stop after that, although there is still debate about whether it will announce another later in the year.

"With inflation easing and odds for a soft landing rising, investors may adopt an 'it could have been worse mood'," said Stephen Innes at SPI Asset Management.

"Perhaps it's unlikely risk sentiment will drift too far askew, especially given the less hawkish implications the global inflation reset will have on central bank interest rates."

Asian stock markets began Thursday on the front foot but many lost momentum as the day went on.

Europe's main equity indices were higher approaching the half-way mark.

On Wall Street Wednesday, the Dow chalked up an eighth-straight advance, though disappointing earnings from tech titans Netflix and Tesla after the market closed dented sentiment.

A lot of the unease on trading floors is centred on China's troubled economy, with the recovery from years of zero-Covid policies appearing to have shuddered to a halt, with the threat of deflation lingering.

A report earlier this week showed growth came in a lot lower than expected owing to a drop in consumer activity and following figures pointing to weak demand for the country's goods overseas.

And investors are growing anxious for Beijing to implement measures to reinvigorate growth, with very little concrete coming out so far, apart from some small interest rate moves and pledges to aid the property sector.

- Key figures around 1045 GMT -

London - FTSE 100: UP 0.7 percent at 7,644.47 points

Frankfurt - DAX: UP 0.3 percent at 16,160.75

Paris - CAC 40: UP 0.4 percent at 7,354.50

EURO STOXX 50: FLAT at 4,362.57

Tokyo - Nikkei 225: DOWN 1.2 percent at 32,490.52 (close)

Hong Kong - Hang Seng Index: DOWN 0.1 percent at 18,928.02 (close)

Shanghai - Composite: DOWN 0.9 percent at 3,169.52 (close)

New York - Dow: UP 0.3 percent at 35,061.21 (close)

Euro/dollar: UP at $1.1211 from $1.1204 on Thursday

Pound/dollar: DOWN at $1.2905 from $1.2937

Euro/pound: UP at 86.87 pence from 86.59 pence

Dollar/yen: DOWN at 139.43 yen from 139.71 yen

Brent North Sea crude: UP 0.4 percent at $79.74 per barrel

West Texas Intermediate: UP 0.2 percent at $75.46 per barrel

B.Turner--SFF