Global Stock Markets Diverge After Global Rally

Global stock markets diverged and the dollar was mixed against main rivals Friday following an equities rally triggered by a jumbo US interest rate cut this week.

In early afternoon deals, European stocks pared back hefty gains from the previous session, won after the Federal Reserve opted for a bumper 50-basis-point rate reduction and pledged further cuts as inflation cools.

There had been fears the move could signal officials were worried about the economy and were behind the curve in easing policy.

But data Thursday showing jobless claims at their lowest since May suggested the United States was heading for a soft landing, rather than recession.

"The Fed's decision to cut rates by 50-basis points has been warmly welcomed by markets, with the bank shifting towards a pro-growth stance after years of blindly trying to drive down price pressures at all costs," said Joshua Mahony, chief market analyst at Scope Markets.

Asia's main stock markets closed out the mostly higher after Thursday's advances.

The yen reversed earlier gains after the Bank of Japan decided against another hike to borrowing costs.

The BoJ began to move away from its long-running policy of ultra-low rates in March -- which saw the first increase in 17 years -- but a second hike in July sent shockwaves through markets and caused a surge in the yen.

Bets on more tightening -- and a period of cutting by the Fed -- has weighed on the dollar while supporting the yen this week.

After a muted initial reaction to the Fed cut, Wall Street bounded higher Thursday, with the S&P 500 and Dow hitting new records and the Nasdaq piling on more than two percent.

Frankfurt stocks fell a day after hitting a record high, while Paris and London also saw losses.

London's FTSE 100 index retreated after the pound won support thanks to the Bank of England holding its interest rate at 5.0 percent in a decision Thursday.

Official data Friday showed UK debt has reached 100 percent of Britain's annual gross domestic product, while a closely-watched index revealed a big drop in UK consumer confidence this month.

Gold hit a fresh record high above $2,610 an ounce on the prospect of lower US borrowing costs, which makes the precious metal, seen as a haven investment, more attractive.

London - FTSE 100: DOWN 0.6 percent at 8,279.91 points

Paris - CAC 40: DOWN 0.7 percent at 7,563.10

Frankfurt - DAX: DOWN 0.7 percent at 18,871.01

Tokyo - Nikkei 225: UP 1.5 percent at 37,723.91 (close)

Hong Kong - Hang Seng Index: UP 1.4 percent at 18,258.57 (close)

Shanghai - Composite: FLAT percent at 2,736.81 (close)

New York - Dow: UP 1.3 percent at 42,025.19 (close)

Pound/dollar: UP at $1.3289 from $1.3281 on Thursday

Euro/dollar: DOWN at $1.1158 from $1.1161

Dollar/yen: UP at 144.39 yen from 142.57 yen

West Texas Intermediate: DOWN 0.3 percent at $71.73 per barrel

Brent North Sea Crude: DOWN 0.5 percent at $74.49 per barrel