Top equity markets in the US continued to rebound on Friday after some lower-than-expected inflation data, while weak investor sentiment prevailed in Europe after a tumultuous week.
It was a mixed session for global stocks as investors continue to digest key economic releases and central bank signals.
In London, the FTSE 100 had been treading water on Friday afternoon but closed 20.71 points lower, or 0.26%, at 8,084.61, following losses for utilities firms.
It was a weaker session for top markets elsewhere in Europe. In Paris, the Cac 40 moved 0.27% lower, and in Frankfurt, the Dax fell 0.43% at the close.
Over in New York, it was a choppy start to the day with Wall Street seeing an early sell-off, as US legislators rush to secure a deal to avoid a government shutdown.
President-elect Donald Trump’s new funding plans were rejected by the House of Representatives on Thursday night, with legislators returning on Friday in the hope of striking a deal before Christmas.
Meanwhile, policymakers’ preferred measure of underlying inflation remained unchanged last month and came in below analysts’ expectations, according to new data.
Investors have been visibly rattled by the Fed’s shift this week. Sentiment has swung dramatically to extreme fear
Jochen Stanz, chief market analyst at CMC Markets UK
This helped fuel a rebound in equity markets after the Federal Reserve earlier this week revised its inflation forecasts higher.
By the time European markets closed, stocks had firmly rebounded and both the S&P 500 and Dow Jones indices were about 1.8% higher.
Jochen Stanz, chief market analyst at CMC Markets UK, said: “Investors have been visibly rattled by the Fed’s shift this week. Sentiment has swung dramatically to extreme fear.
“Today’s PCE (personal consumption expenditures) data serves as quite a reprieve after this week’s sell-off. If a resolution to the budget standoff can also be reached, the sharp decline in stocks might quickly transform into a bear trap.”
The pound was strengthening against a weaker dollar at the end of the week, moving 0.7% higher against the US currency, at 1.259. Sterling was up about 0.05% against the euro, at 1.207.
In company news, Frasers Group was the biggest riser on the FTSE 100 with gains of more than 4% during the day after its founder Mike Ashley was denied a seat on the board of Boohoo, following a dispute over how the company should be run.
Just under two thirds of Boohoo’s shareholders voted against Mr Ashley being appointed as a director of the fashion retailer at a meeting at its Manchester base.
When markets closed on Friday shares in Frasers rose 2.8%, and shares in Boohoo rose 1.2%.
Elsewhere, shares in Headlam jumped after the flooring distributor told investors it had sold properties in its portfolio for nearly £54 million.
Headlam said it will generate a profit from the sale, which formed part of plans to optimise its network and make operations more efficient. Shares closed 6.1% higher.
The biggest risers on the FTSE 100 were Frasers, up 17p to 626.5p, B&M European, up 7.7p to 362.7p, Rentokil, up 8p to 399.6p, Vistry, up 13p to 659p, and Segro, up 13.6p to 695.6p.
The biggest fallers on the FTSE 100 were Severn Trent, down 58p to 2,516p, JD Sports, down 2.1p to 95p, Hiscox, down 22p to 1,084p, United Utilities, down 18.5p to 1,045.5p, and Intermediate Capital, down 26p to 2,050p.