European stocks lifted from doldrums by Wall Street

Roland JACKSON
China's economy expanded at its slowest pace for nine years

Eurozone equities received a late boost from rising US stocks to emerge almost unscathed from Friday's session despite worries about Italy's finances, Chinese growth and rising global interest rates.

Even Milan's long-suffering stock market recovered from early losses after EU finance chief Pierre Moscovici said Italy's financial situation presented no danger of contagion to other countries.

On Thursday, the European Commission formally warned Italy that its budget plans for 2019 were a serious concern, demanding "clarifications" over Rome's "unprecedented" deviation from EU rules.

"Italy is headed for a showdown with Brussels and I am not sure they have much to lose," Manulife equities head David Hussey told AFP.

- Avoid 'loss of Italy' -

"Given how damaging Brexit is to the EU project, a loss of Italy would be devastating and to be avoided at all costs -- hence I think (that) Italy's hand is quite strong."

However, Italy is facing higher borrowing costs as investors sell off its bonds. In the secondary market, the yield on 10-year government bonds reached 3.726 percent, its highest rate since 2014.

Italy's deficit is now projected at 2.4 percent of GDP, far higher that the 0.8 percent estimate given by the earlier centre right government.

Brussels says Rome needs to cut the deficit in order to begin reducing its massive debt, which exceeds 130 percent of annual economic output -- way above the EU's 60 percent ceiling.

The Frankfurt and Paris bourses ended Friday's session with small losses, while London rose.

On Wall Street the Dow index also posted gains in the late New York morning, after losing 1.3 percent on Thursday, with a number of strong corporate results bolstering sentiment.

But after intra-session volatility wrong-footed many investors in recent Wall Street sessions, Briefing.com analyst Patrick O'Hare cautioned that "how the market opens today won't be as important as how it closes".

- 'Hard to adapt' -

But worries continue on several fronts, analysts said, including an expected series of Federal interest rate rises.

"Many investors have not experienced a rising rate cycle and will find it hard to adapt", said Hussey at Manulife.

Investors fret over rising borrowing costs because they impact on loan repayments for both businesses and individuals -- and affect consumers' disposable incomes.

Earlier Friday, Asian stock markets traded mixed, with Shanghai bouncing back from early losses despite data showing Chinese economic growth slowed to its weakest level in nine years.

The world's second largest economy expanded 6.5 percent on-year in July-September as a campaign to tackle mounting debt took its toll -- alongside trade frictions with the US.

The growth figure marked the worst performance since the start of 2009.

Shanghai equities nevertheless finished the week with a rally after a rare joint intervention by some of China's top financial officials.

However the pronounced slowdown weighed on markets elsewhere because China is a crucial driver of global economic growth.

"The Chinese economy is slowing -- but that's down to a deleveraging process and concerns about trade and a global slowdown, as interest rates rise," CMC Markets analyst Michael Hewson said.

Oil prices rebounded after Thursday's sharp losses caused by a surprise jump in US energy stockpiles.

- Key figures around 1540 GMT -

London - FTSE 100: UP 0.3 percent at 7,049.80 points (close)

Frankfurt - DAX 30: DOWN 0.3 percent at 11,553.83 (close)

Paris - CAC 40: DOWN 0.6 percent at 5,084.66 (close)

Milan - FTSE MIB: FLAT at 19,080.16 (close)

EURO STOXX 50: FLAT at 3,210.82

New York - Dow Jones: UP 0.3 percent at 25,450.70

Tokyo - Nikkei 225: DOWN 0.6 percent at 22,532.08 (close)

Hong Kong - Hang Seng: UP 0.4 percent at 25,561.40 (close)

Shanghai - Composite: UP 2.6 percent at 2,550.47 (close)

Euro/dollar: UP at $1.1494 from $1.1453 at 2100 GMT

Pound/dollar: UP at $1.3038 from $1.3018

Dollar/yen: UP at 112.44 from 112.21 yen

Oil - Brent Crude: UP 79 cents at $80.08 per barrel

Oil - West Texas Intermediate: UP 76 cents at $69.41

burs-jh/har