Global markets remain calm as half-year comes to an end

LONDON Markets were ending the half-year on a settled note Friday after a month of volatility that pushed many of the world's major stock indexes down from multi-year and record highs.

The coincidence of the end to the month, quarter and half year may prompt some volatility in trading, as some investors try to make their portfolios look better for financial reports. But the prevailing market mood was calm, particularly compared with last week.

That's due to a number of factors, including solid U.S. economic data and a seeming attempt by the U.S. Federal Reserve to ease investor concerns over the pace of any reduction in its monetary stimulus.

Japan also got a dose of upbeat economic news when the government said industrial production rose 2 percent in May from April, the fourth straight monthly increase. Perhaps more importantly, the consumer price index stopped falling for the first time in seven months. That's important as the Bank of Japan is engaged on a massive monetary stimulus to get prices rising again after a near two-decade period of deflation.

"The latest Japanese economic data just published highlighted encouraging signs of recovery," said Neil MacKinnon, global macro strategist at VTB Capital.

The news gave Japan's main stock index, the Nikkei 225 index, a big lift as it finished 3.5 percent higher at 13,677.32. The Nikkei's gains fed through across Asia and helped shore up Europe at the open.

Britain's FTSE 100 rose 0.1 percent to 6,251, while Germany's DAX was more or less unchanged at 7,989. The CAC-40 in France fell 0.4 percent to 3,749.

Wall Street was poised for another solid performance, with Dow futures up 0.3 percent and the broader S&P 500 futures 0.4 percent higher.

The main U.S. economic data later will be a manufacturing survey around the Chicago region and the University of Michigan's latest assessment of consumer confidence around the country. They may determine whether the Dow finishes the month in positive territory. It needs to add 200 points to do so, a tough ask.

"It's arguably going to be close as to whether the Dow can manage to finish the month positive," said Fawad Razaqzada, market strategist at GFT Markets. "The bulls would need to remain in a rampant move."

One reason stock markets have calmed this week is that Fed officials appear to be trying to calm investor jitters over an upcoming reduction in the financial assets the central bank buys every month to help the economy. The so-called tapering of the purchases raised fears because the stimulus has been one of the drivers for stocks over recent years.

Earlier in Asia, Hong Kong's Hang Seng advanced 1.8 percent to 20,803.29 while mainland Chinese shares also rose as fears eased of a credit crunch in China. The Shanghai Composite Index gained 1.5 percent to 1,979.21, while the smaller Shenzhen Composite Index edged up less than 0.1 percent to 887.68.

The central bank had allowed rates that banks pay to borrow from each other to soar last week, part of an attempt to clamp down on massive credit in the informal lending industry. Later, however, Chinese policymakers softened their stance with the promise to provide "liquidity support" if needed.

In currency markets, the dollar has been making further gains against the yen, trading up 0.5 percent higher at 99.01 yen on Friday. The euro was up 0.2 percent at $1.3059.

Oil prices were steady too with the benchmark rate up 60 cents at $97.65 a barrel.