San Francisco Frontiers - Inflation data cheers Wall Street, French stocks slump

The core personal consumption expenditures (PCE) price index rose by 0.1 percent monthly in May, compared with a 0.3-percent gain in April. It dropped to 2.6 percent on an annual measure in May.

The core PCE, which excludes volatile food and energy prices, is the US Federal Reserve's preferred measure of underlying inflation.

The drop adds to the case for it to begin cutting interest rates, which currently sit at a 23-year high.

The data "could set the stage for a September cut and potentially put the Fed on track to cut rates more than once this year," said Bret Kenwell, US investment analyst at eToro online brokerage.

Fed officials have tried to temper rate-cut expectations, warning they wanted to see more evidence inflation was being brought under control. Kenwell said inflation data over the summer would be important in determining the timing of a cut.

Wall Street stocks advanced, the Dow adding 0.2 percent.

Investors were digesting an election debate Thursday between US President Joe Biden and his predecessor Donald Trump.

"We don't think Biden's disastrous performance at last night’s debate will have a material impact on markets in the short term," said Kathleen Brooks, research director at XTB.

"The election is still many months away and a lot could change."

In Europe, the Paris stock market dropped 0.7 on the last day of trading before France's first-round legislative polls on Sunday.

President Emmanuel Macron's centrist alliance was facing potential defeat to a surging far right, whose spending plans could put Paris on course for a standoff with the European Union.

The Paris stock exchange's CAC 40 index has slumped by 6.5 percent since Macron dissolved the lower house of parliament on June 9 following a disastrous showing for his centrist party in European elections.

The gap between the yield on French and benchmark German 10-year government bonds widened to its highest level since 2012, another sign investors are worried about the spending plans of the far-right and the left-wing coalition. Both are polling better than Macron's party.

Britain holds its general election on Thursday, which is expected to see the ruling Conservatives of Prime Minister Rishi Sunak ousted after 14 years in government by the main opposition Labour Party.

Official data Friday showed the UK economy's recovery from recession was stronger than previously thought in the first quarter.

London's FTSE 100 ended the day down 0.2 percent despite spending much of the day in positive territory.

In Asia, the yen extended losses to hit a fresh 38-year low Friday, putting investors on guard for a possible intervention by Japanese authorities, before rebounding.

Asian equity markets mostly closed higher.

- Key figures around 1530 GMT -

New York - Dow: UP 0.2 percent at 39,254.25 points

New York - S&P 500: UP 0.3 percent at 5,497.99

New York - Nasdaq Composite: UP 0.3 percent at 17,906.90

London - FTSE 100: DOWN 0.2 percent at 8,164.012 (close)

Paris - CAC 40: DOWN 0.7 percent at 7,479.40 (close)

Frankfurt - DAX: UP 0.1 percent at 18,235.45 (close)

EURO STOXX 50: DOWN 0.2 percent at 4,894.02 (close)

Tokyo - Nikkei 225: UP 0.6 percent at 39,583.08 (close)

Hong Kong - Hang Seng Index: FLAT at 17,718.61 (close)

Shanghai - Composite: UP 0.7 percent at 2,967.40 (close)

Dollar/yen: UP at 160.87 yen from 160.79 yen on Thursday

Euro/dollar: UP at $1.0717 from $1.0707

Pound/dollar: DOWN at $1.2637 from $1.2642

Euro/pound: UP at 84.80 pence from 84.67 pence

Brent North Sea Crude: FLAT at $86.36 per barrel

West Texas Intermediate: DOWN 0.7 percent at $81.20 per barrel

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M.Powell--SFF