European markets set to inch higher as global sentiment rebounds

  • European investors continue to digest the European Central Bank's decision on Thursday to slow down bond buying under its pandemic emergency purchase programme (PEPP).
  • Weekly jobless claims figures on Thursday indicated that the U.S. labor market recovery remains on track, as the number of initial unemployment filings last week fell to 310,000, the lowest for nearly 18 months.

LONDON — European markets are set for a cautiously higher open on Friday, tracking global counterparts as sentiment rebounded following a rocky week.

Britain's FTSE 100 is seen around 24 points higher at 7,048, Germany's DAX is set to climb around 32 points to 15,655 and France's CAC 40 is expected to open up around 15 points at 7,000, according to IG data.

The pan-European Stoxx 600 is still on track to end the week in the red.

Shares in Asia-Pacific climbed in Friday trade as Hong Kong-listed stocks affected by China's regulatory crackdown bounced back, after potential further action from Beijing on gaming companies was revealed to not be as harsh as first reported.

Stateside, stock index futures were higher in early premarket trading on Friday after Wall Street notched a fourth consecutive day of losses on Thursday.

Weekly jobless claims figures on Thursday indicated that the U.S. labor market recovery remains on track, as the number of initial unemployment filings last week fell to 310,000, the lowest for nearly 18 months.

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European investors continue to digest the European Central Bank's decision on Thursday to slow down bond buying under its pandemic emergency purchase programme (PEPP) in response to higher inflation and stronger GDP growth across the euro zone. The ECB also modestly revised up its medium-term inflation forecasts.

"We counted at least four decisions which we will have to come back in December for, on top of the pace of PEPP for Q1 2022: the future of PEPP beyond March (wind down the programme or extend it, and what to do with the 'normal' QE programme APP), a possible new round of cheap loans to the banks (TLTROs) and possible technical adjustments to the asset purchase programmes to ensure it can last for longer," said HSBC economists Simon Wells and Fabio Balboni.

"For now, the relatively dovish upward revision to the inflation forecast should reassure markets that more support is coming."

In other news, finance ministers from the Group of Seven (G-7) major economies said Thursday that they need to make more technical progress on plans for global corporate tax reform.

Germany's finance and justice ministries were raided on Thursday as prosecutors investigate the government's anti-money laundering agency, casting doubt over failings to tackle financial crime in Europe's largest economy.

On Friday, euro zone finance ministers will meet in Ljubljana, Slovenia, for informal talks.

On the data front, final German inflation figures for August are due Friday morning, along with July's GDP growth estimate and services, industrial and manufacturing output readings from the U.K.

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