European equities run out of steam before weekend

LONDON: European stock markets ran out of steam on Friday, despite gains elsewhere, as investors continued to dwell on inflationary concerns, dealers said.

London stocks edged 0.2 percent higher near midday, while Frankfurt and Paris each dropped about 0.2 percent in eurozone early afternoon deals.

Markets had jumped Thursday after the Bank of England (BoE) became the latest major central bank to maintain ultra-low interest rates, echoing the views of the US Federal Reserve and its fellow institution in the eurozone that inflationary spikes are only temporary.

Traders have for months worried that the blistering global recovery will fan price increases and force rate hikes -- but central bankers have sought to downplay inflation.

"Today has seen a return to the indecisive mood evident throughout much of the week, with yesterday's boost courtesy of the BoE proving short-lived," said IG analyst Joshua Mahony.

"That BoE meeting did alleviate fears of a hawkish swing across the central banks, but ultimately whether the BoE or the Fed are right will come down to the trajectory of inflation over the coming months."

On the upside, Asian stocks and oil prices rose on Friday, building on recent gains, after US lawmakers and the White House agreed a rare bipartisan deal on infrastructure that will provide another huge cash injection into the world's top economy.

The advance came after the S&P and Nasdaq chalked up more records in New York as traders turned their attention back to the strong recovery from last year's collapse and away from the expected taper of ultra-loose Federal Reserve monetary policy.

Optimism across trading floors was already buoyant after a string of central bank officials soothed worries that they will take away the punch bowl too quickly.

But buying was given an extra boost by news that Joe Biden had reached an infrastructure deal worth nearly $1 trillion with lawmakers from both parties that could lead to the biggest spending in decades on roads, bridges, ports and broadband.

Politicians had "come together and forged an agreement that will create millions of American jobs, and modernise our American infrastructure to compete with the rest of the world and own the 21st century", he said.

The oil market remained upbeat and not far from highs not seen since 2018, as traders grow increasingly confident that already strong demand will continue to improve as the recovery progresses.

Traders are now looking forward to Thursday's meeting of OPEC and other major producers where they will discuss whether or not to lift output to prevent a supply shortfall.

"The demand recovery has been swift and there is pressure on OPEC+ to release more barrels, otherwise we might see $80 a barrel by next month," said Howie Lee at Oversea-Chinese Banking Corp.

Key figures at 1030 GMT -

London - FTSE 100: UP 0.2 percent at 7,120.88 points

Frankfurt - DAX 30: DOWN 0.2 percent at 15,566.24

Paris - CAC 40: DOWN 0.2 percent at 6,617.67

EURO STOXX 50: DOWN 0.2 percent at 4,115.32

Tokyo - Nikkei 225: UP 0.7 percent at 29,066.18 (close)

Hong Kong - Hang Seng Index: UP 1.4 percent at 29,288.22 (close)

Shanghai - Composite: UP 1.2 percent at 3,607.56 (close)

New York - Dow: UP 1.0 percent at 34,196.82 (close)

Euro/dollar: UP at $1.1943 from $1.1932 at 2100 GMT

Pound/dollar: DOWN at $1.3909 from $1.3922

Euro/pound: DOWN at 85.87 pence from 85.70 pence

Dollar/yen: DOWN at 110.73 yen from 110.87 yen

Brent North Sea crude: DOWN 0.4 percent at $75.27 per barrel

West Texas Intermediate: DOWN 0.5 percent at $72.96 per barrel