Stock Markets Rally, Oil Prices Slide

Japanese stocks surged and markets across Asia started strong on Friday AFP

Stock markets mostly rallied Friday after encouraging US retail sales data reassured investors about the health of the world's biggest economy.

The dollar dropped on expectations of looming cuts to US interest rates, while oil prices tumbled as weak Chinese demand expectations offset turmoil in the Middle East, according to traders.

London was a rare faller among stock markets as a strengthening pound weighed on multinationals earning in dollars.

"Riding the wave of a weaker yen, Japan's stocks led the charge... with the Nikkei 225 surging over three percent, setting the stage for its best week in four years," noted independent analyst Stephen Innes.

"This rally followed Wall Street's overnight gains, spurred by robust economic data that eased fears of a looming recession and hinted that the US economy might be on track for a soft landing."

Britain, meanwhile, enjoyed more strong economic data Friday, with news that retail sales rebounded in July. This followed figures this week showing solid economic growth and falling unemployment in the second quarter.

In Hong Kong on Friday, the Hang Seng index -- which has had the wind taken out of its sails over the past several months -- enjoyed a strong end to the week.

Despite a nearly 30-percent dip in quarterly profit reported on Thursday, Chinese tech giant Alibaba saw its stock soar in Hong Kong after it recorded gains in New York.

Alibaba runs some of China's most popular e-commerce apps and its performance is widely considered an indicator of broader economic trends.

Elsewhere on the corporate front, shares in German chemicals giant Bayer jumped 11.5 percent in early afternoon deals Friday after a US court victory in the group's long-running fight against claims its glyphosate-based weedkillers cause cancer.

An appeals court in Pennsylvania on Thursday rejected a claim by a landscaper that Bayer's Monsanto unit broke state laws by not putting a cancer warning on its Roundup weedkiller.

Oil prices slumped more than two percent, with Brent North Sea crude falling under $80 per barrel.

"The significant price recovery on the oil market has run out of steam in recent days," said Commerzbank analyst Carsten Fritsch.

"For one thing, the feared retaliatory strike by Iran (on Israel) has so far failed to materialise, which has probably favoured a partial pricing out of the risk premium. In addition, new demand concerns are weighing on the market."

Major oil producer Iran has threatened to retaliate against Israel for last month's killing of Hamas political leader Ismail Haniyeh in Tehran.

London - FTSE 100: DOWN 0.4 percent at 8,314.09 points

Paris - CAC 40: UP 0.3 percent at 7,442.27

Frankfurt - DAX: UP 0.6 percent at 18,297.95

EURO STOXX 50: UP 0.6 percent at 4,836.42

Tokyo - Nikkei 225: UP 3.6 percent at 38,062.67 (close)

Hong Kong - Hang Seng Index: UP 1.9 percent at 17,430.16 (close)

Shanghai - Composite: UP 0.1 percent at 2,879.43 (close)

New York - Dow: UP 1.4 percent at 40,563.06 points (close)

Euro/dollar: UP at $1.0996 from $1.0972 on Thursday

Pound/dollar: UP at $1.2908 from $1.2853

Dollar/yen: DOWN at 148.37 yen from 149.06 yen