(Alliance News) - Stocks in London are called to open lower on Friday, ending the week on the back foot as hawkish words from a US central banker kept a lid on enthusiasm, with a UK gross domestic product reading ahead too.

IG says futures indicate the FTSE 100 to open 36.0 points lower, 0.4%, at 7,582.60 on Friday. The index of London large-caps closed 31.30 points, 0.4%, higher at 7,618.60 on Thursday. It has risen 0.7% so far this week.

In Tokyo, financial markets were closed for Mountain Day. The Shanghai Composite was down 1.3%, the Hang Seng in Hong Kong down 0.6%, and the S&P/ASX 200 in Sydney was 0.3% lower.

In New York, the Dow Jones Industrial Average closed up 0.2% on Thursday. The S&P 500 closed flat and the Nasdaq Composite added 0.1%.

After starting the day strongly, and seeing a boost from a favourable inflation reading, equities in New York closed around session lows.

San Francisco Federal Reserve Bank President Mary Daly said while the fall in US inflation was good news, it is still too high, leaving the central bank with "more work to do".

Speaking to Yahoo Finance, Daly said while the data is good news, "it is not a data point that says victory is ours. There's still more work to do." Daly said she is highly data dependent and is reserving her judgment for how much work is needed to bring down inflation until the Fed's September policy meeting, when she will pencil in her projections for interest rates.

Daly spoke after numbers showed the US yearly inflation rate accelerated to 3.2% in July, from 3.0% in June, snapping a streak of 12 successive slowdowns. The latest figure was shy of consensus, however, which had chalked in an acceleration to 3.3%, according to FXStreet.

"European markets enjoyed their second successive day of gains yesterday, boosted by the announcement by China to end its ban on overseas travel groups to other countries has also helped boost travel, leisure, and the luxury sector. The gains were also helped by a lower-than-expected rise in US CPI of 3.2%, with core prices slipping back to 4.7%, which increased expectations that we could well have seen the last of the Fed rate hiking cycle, which in turn helped to push the S&P500 to its highest levels this week and on course to post its biggest daily gain since July," CMC Markets analyst Michael Hewson commented.

"Unfortunately, San Francisco Fed President Mary Daly had other ideas, commenting that the central bank has more work to do when it comes to further rate hikes."

There is a US producer price index reading at 1330 BST on Friday.

The dollar was on the up on Friday morning. The euro faded to USD1.0989 early Friday, down from USD1.1014 at the European equities close on Thursday. Against the yen, the greenback climbed to JPY144.70 from JPY144.46.

The pound faded to USD1.2683 from USD1.2728, ahead of a reading of the UK economy. GDP data is reported at 0700 BST.

The UK economy is expected to have flatlined in the second-quarter, according to FXStreet cited consensus, after recording 0.1% quarter-on-quarter growth in the first three months of the year. Annual growth of 0.2% is predicted, in line with what was achieved in the first-quarter.

CMC's Hewson added: "Despite the resilience shown by the consumer, expectations for today's Q2 are for a 0% growth which seems rather stingy when we saw 0.1% in Q1. This comes across as surprising given that Q2 has felt better from an economic point of view than the start of the year, with lower petrol prices helping to put more money in people’s pockets despite higher bills in April. This raises the prospect of an upside surprise, however that might come with subsequent revisions.

"Nonetheless, even as we look back at Q2, the outlook for Q3 is likely to become more challenging even with the benefit of a lower energy price cap, helping to offset interest rates now at their highest levels for over 15 years. With more and more fixed-rate mortgages set to get refinanced in the coming months, the second half of the year for the UK economy could well be a lot more challenging than the first half."

Gold traded at USD1,915.28 an ounce early Friday, down slightly from USD1,916.01 at the European equities close on Thursday. A barrel of Brent oil fetched USD86.24, down from USD87.02.

In the UK corporate calendar on Friday, there are half-year results from investment trust Murray International and insurer FBD Holdings.

By Eric Cunha, Alliance News news editor

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