European shares set to inch higher as investors monitor recovery, tapering fears

  • The Bank of England on Thursday forecast inflation hitting 3% at its peak before cooling down, but insisted the spike above its 2% target would be transitory.
  • Investors will be watching for a key U.S. inflation indicator on Friday when the Commerce Department releases the core personal consumption expenditures index.

European stocks are set to open slightly higher on Friday, tracking global sentiment as investors place faith in the prospect of a steady economic rebound.

Britain's FTSE 100 is seen around 9 points higher at 7,119, Germany's DAX is set to climb around 24 points to 15,613 and France's CAC 40 is expected to add around 10 points to 6,641, according to IG data.

The cautiously optimistic start for European markets mirrors that around the world. Shares in Asia-Pacific broadly advanced during Friday's trade, led by Hong Kong's Hang Seng index, while U.S. stock futures are pointing to a higher open on Wall Street later in the day.

Investors will be watching for a key U.S. inflation indicator on Friday when the Commerce Department releases the core personal consumption expenditures index.

Economists polled by Dow Jones expect prices to have risen by 3.4% in May from a year earlier. They expect a rise of 0.6% from April to May.

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In Europe, the U.K. is set to publish plans next month to lift travel restrictions for fully vaccinated people except those at the highest Covid-19 risk level.

Meanwhile the Bank of England on Thursday forecast inflation surpassing 3% at its peak before cooling down, but insisted the spike above its 2% target would be transitory and kept its monetary stimulus at full throttle.

Germany's GFK consumer sentiment index, published before the bell Friday, showed consumer confidence in Europe's largest economy rising to -0.3 points heading into July, vastly outstripping a consensus forecast of -4.0, and up from -6.9 the previous month.

– CNBC's Maggie Fitzgerald contributed to this report.

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