San Francisco Frontiers - European stock markets retreat after positive start to year

Asia's main equity indices closed mostly higher, with Seoul jumping nearly two percent despite deepening political uncertainty in Asia's fourth-largest economy.

There were gains also for Hong Kong, Sydney and Taipei, although Shanghai slumped for a second session running.

Wall Street ended lower Thursday on the first US trading day of 2025.

"The post-Christmas malaise in US stocks continued as investors await the inauguration of president-elect Donald Trump who could prove a wildcard for markets this year," noted Russ Mould, investment director at AJ Bell.

According to US media, departing President Joe Biden has decided to block the proposed $14.9 billion purchase of US Steel by Japan's Nippon Steel and will announce the move as soon as Friday.

Nippon Steel has described the transaction as a lifeline to Pennsylvania's much-diminished steel industry.

US stocks had opened higher Thursday before ending modestly lower.

The Wall Street losses were driven in part by disappointing results from Tesla, which slumped 6.1 percent after fourth-quarter auto sales lagged expectations.

The dollar dipped Friday against the euro, pound and yen.

The US currency had Thursday reached multi-year highs against some of its main rivals, reflecting expectations that the world's biggest economy would outpace others in 2025.

The yuan on Friday hit the lowest dollar level since late 2023.

"The very negative performance of China equities provides a better indication of the weakening sentiment around China assets at the start of 2025, and ahead of Trump's return to the White House," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

Investors are gearing up for Trump's inauguration on January 20, set to be followed by the formal announcement of deep tariffs, especially on Chinese goods, that could rattle international trade.

US jobless claims released Thursday fell more than expected, highlighting a robust labour market and leaving the Federal Reserve with less reason to support fresh rate cuts.

Other significant economic releases ahead include data on inflation and retail sales during the holiday shopping season.

- Key figures around 1100 GMT -

London - FTSE 100: DOWN 0.2 percent at 8,247.80 points

Paris - CAC 40: DOWN 0.9 percent at 7,327.26

Frankfurt - DAX: DOWN 0.4 percent at 19,940.47

Tokyo - Nikkei 225: closed

Hong Kong - Hang Seng Index: UP 0.7 percent at 19,760.27 (close)

Shanghai - Composite: DOWN 1.6 percent at 3,211.43 (close)

New York - Dow: DOWN 0.4 percent at 42,392.27 (close)

Euro/dollar: UP at $1.0283 from $1.0269 on Thursday

Pound/dollar: UP at $1.2398 from $1.2382

Dollar/yen: DOWN at 157.34 yen from 157.52 yen

Euro/pound: FLAT at 82.95 pence

West Texas Intermediate: DOWN 0.4 percent at $72.82 per barrel

Brent North Sea Crude: DOWN 0.4 percent at $75.63 per barrel

I.Sanders--SFF