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European markets edged higher on Friday, lifted by financial and mining stocks, with uncertainty over a US-China trade deal limiting gains fuelled by dovish signals from the Federal Reserve this week.
Fed Chair Jerome Powell confirmed the US economy was still under threat from disappointing factory activity, tame inflation and a simmering trade war, and said the Fed stood ready to “act as appropriate.”
The pan-European STOXX 600 index up 0.2 per cent by 0855 GMT, lifted by a 1.5 per cent rise in basic resources stocks as China iron ore logged its best week since around mid-June. Banks rose 0.7 per cent.
Meanwhile, data out of China showed that Beijing's exports fell in June as the United States ramped up trade pressure, while imports shrank more than expected, pointing to further strains on the world's second-largest economy.
“The export data was really weak, and it's one signal that the trade war has started to bite Chinese exporters and that companies are starting to re-route their supply chains,” said Stefan Koopman, senior market economist at Rabobank in Utrecht, Netherlands. “European markets are waiting for a cue on what is happening between the United States and China on trade.”
Regional markets have regained their footing after a huge sell-off in May due to an escalation in US-China trade tensions on expectations of rate cuts by major central banks.
Friday's moves will cap a tepid week and set the main index to post its first weekly loss in six weeks, in contrast to world stocks that are on course to end the week higher. Putting a damper on trade deal hopes, US President Donald Trump said on Thursday China was not living up to promises it made on buying agricultural products from American farmers.
Among stocks, Daimler slipped 0.8 per cent after the luxury carmaker warned investors it expected to swing to a second-quarter loss before interest and taxes of 1.6 billion euros. “It's highly indicative on what is happening on trade over the last couple of months. We've seen carmakers have difficulty, with Chinese car sales dropping over the past 6 to 12 months,” said Rabobank's Koopman.
Healthcare stocks slipped as drugmakers resumed their slide after the White House said it was ditching a key plan to lower US drug prices, raising the possibility of new measures focused on drugmakers.
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