World Shares Mixed as Weak US Data Eases Rate Hike Worries

TOKYO (AP) -- European shares advanced Friday after a mixed session in Asia, where Chinese markets retreated after the country's leaders acknowledged the slowing economy won't hit its official 5.5% growth target this year.

Investors appear to have grown more convinced that the Federal Reserve may temper its aggressive interest rate hikes aimed at taming inflation after the Commerce Department reported the U.S. economy contracted at a 0.9% annual pace in the last quarter. That followed a 1.6% year-on-year drop in the first quarter.

Consecutive quarters of falling GDP are an informal, though not definitive, indicator of what economists call a technical recession.

Germany's economy, the largest in Europe, stagnated in the April-June quarter and grew 1.5% in annual terms, adding to fears that it may be on the brink of recession. Worries about energy supplies are at the center of concern about the outlook for the economy, which like many others is suffering from high inflation.

Germany's DAX added 0.6% to 13,366.52, while France's CAC 40 rose 1.3% in early trading to 6,423.56. Britain's FTSE 100 gained 0.6% to 7,390.79. The future for the Dow industrials was up 0.2% while that for the S&P 500 rose 0.7%.

In Asia, investors were cautiously eyeing regional tensions after President Joe Biden and China's Xi Jinping spoke for more than two hours on Thursday. China left no doubt it blames the U.S. for a deteriorating relationship, but the White House said call's aim was to "responsibly manage our differences and work together where our interests align."

Hong Kong's Hang Seng index dropped 2.4% to 20,156.51 and the Shanghai Composite index declined 0.9% to 3,253.24 after China's leaders said after a planning meeting that the country would stick with a zero COVID policy that has disrupted manufacturing and other business activity. That underscores the high cost Xi's government is willing to incur to stop the virus in a politically sensitive year when he is widely expected to try to extend his term in power.

Japan's benchmark Nikkei 225 inched down less than 0.1% to finish at 27,801.64, while Australia's S&P/ASX 200 gained 0.8% to 6,945.20. South Korea's Kospi added 0.7% to 2,451.50.

Japanese government data showed factory output in June jumped 8.9% from the previous month, marking the first rise in three months. The recent easing of pandemic lockdowns in China has helped boost Japanese production.

"On the economic data front, easing China's restrictions also drove a stronger-than-expected June output for Japan, with China's reopening potentially having a positive knock-on impact across the region as well into the second half of the year," said Yeap Jun Rong, market strategist at IG in Singapore.

In other trading, benchmark U.S. crude gained $1.98 to $98.40 a barrel in electronic trading on the New York Mercantile Exchange. It lost 84 cents to $96.42 on Thursday.

Brent crude, the international pricing standard, gained $1.68 to $108.82 a barrel.

In currency trading, the U.S. dollar fell to 133.12 Japanese yen from 134.27 yen late Thursday. The euro cost $1.0220, up from $1.0199.