Stock Markets Retreat before Weekend Begins

Most Asian and European stock markets declined Friday as concerns over inflation, economic growth and virus outbreaks weighed on investors' minds, dealers said.

Traders digested data confirming eurozone inflation had slowed in June to 1.9 percent from 2.0 percent in May, which suggested that price pressures remain elevated.

In early afternoon eurozone trade, the Frankfurt stock index had dropped by 0.2 percent and Paris was off by 0.6 percent.

London however gained 0.2 percent in late morning deals, aided in part by upbeat quarterly sales from fashion house Burberry.

"European stocks have seen a solid run-up across the (first) quarter, but the momentum behind the rally has stalled recently," noted Oanda analyst Sophie Griffiths.

"Strong corporate earnings data could go some way to negating the lingering Covid concerns," she added.

Sentiment was also subdued owing to dovish comments from Federal Reserve chief Jerome Powell, who reiterated the US central bank's plans to maintain stimulus initiatives until the economy has fully recovered.

Treasury Secretary Janet Yellen meanwhile warned that inflation would remain elevated for months to come.

"I think we will have several more months of rapid inflation, so I'm not saying that this is a one-month phenomenon," Yellen said Thursday during an interview with CNBC after US markets had closed.

However she predicted that price increases would reach "normal levels" over the medium term.

Wall Street ended with mixed results Thursday, as the Dow closed marginally higher while the other two major indexes retreated.

Asian markets mostly fell on Friday, with Tokyo closing one-percent lower as investors considered expanding Covid-19 infections and the Bank of Japan trimmed its economic growth forecast for the current fiscal year.

- Biden warning on Hong Kong -

Hong Kong's leading index was flat as late profit-taking wiped out earlier gains ahead of an advisory from US President Joe Biden later Friday.

He is expected to warn firms about doing business there as Beijing clamps down.

"The situation in Hong Kong is deteriorating. And the Chinese government is not keeping its commitment that it made how it would deal with Hong Kong," Biden said Thursday at a press conference with visiting German Chancellor Angela Merkel, signalling no imminent improvement in Sino-US relations.

Shanghai closed 0.7 percent lower while Seoul, Taipei, Kuala Lumpur and Bangkok also retreated. Wellington was flat while Sydney, Singapore, and Jakarta ticked higher.

Investors were also waiting for US retail sales data for June to get an idea about the state of the economic recovery.

- Key figures around 1045 GMT -

London - FTSE 100: UP 0.2 percent at 7,023.08 points

Frankfurt - DAX 30: DOWN 0.2 percent at 15,602.68

Paris - CAC 40: DOWN 0.6 percent at 6,454.64

EURO STOXX 50: DOWN 0.4 percent at 4,041.01

Tokyo - Nikkei 225: DOWN 1.0 percent at 28,003.08 (close)

Hong Kong - Hang Seng Index: FLAT at 28,004.68 (close)

Shanghai - Composite: DOWN 0.7 percent at 3,539.30 (close)

New York - Dow: UP 0.2 percent at 34,987.02 (close)

Euro/dollar: UP at $1.1818 from $1.1812 at 2100 GMT Thursday

Pound/dollar: UP at $1.3847 from $1.3829

Euro/pound: DOWN at 85.35 from 85.42 pence

Dollar/yen: UP at 110.07 from 109.83 yen

Brent North Sea crude: UP 0.5 percent at $73.82 per barrel

West Texas Intermediate: UP 0.6 percent at $72.06 per barrel