European equities rose on Friday as traders awaited the latest US bank results at the end of yet another volatile week for markets.
The euro held above $1, having sunk below parity this week on fears Russia would cut off Europe's gas supplies in retaliation for Ukraine war sanctions, pushing the region into recession.
Oil prices rebounded having slumped on Thursday on renewed fears of a global recession that would dent demand for energy.
Hong Kong and Shanghai stocks slid as weak Chinese second-quarter GDP compounded anxiety about a fragile global recovery.
Later on Friday, investors will digest earnings from financial big-hitters Citigroup and Wells Fargo, with Bank of America and Goldman Sachs due on Monday.
'Bruising week'
"The firmer tone across Europe is... ahead of major US earnings, after what has been another bruising week for risk assets," City Index analyst Fawad Razaqzada told AFP.
Global equities had mostly fallen on Thursday as fresh evidence of runaway global inflation ramped up expectations of more aggressive rate hikes by central banks, while disappointing earnings revived recession fears.
Wall Street stumbled on Thursday with sentiment weighed by the disappointing reports from JPMorgan Chase & Co. and Morgan Stanley.
That compounded worries that companies' profits would be hit by the fallout from a number of issues, including rocketing consumer prices, monetary policy tightening and the war in Ukraine.
Markets took a major knock this week from news that US inflation zoomed to a 40-year high of 9.1 per cent in June on energy costs.
After rate hikes by several countries this week, investors now expect the Federal Reserve to lift rates this month by 75 basis points as officials battle decades-high inflation, though some observers suggest a one-percentage-point move could even be on the cards.
While experts warn that raising US rates risks hammering the economy, the Fed has made it clear its number-one priority is bringing down prices.
While experts warn that raising US rates risks hammering the economy, the Fed has made it clear its number-one priority is bringing down prices
This has sent the dollar racing ahead, particularly as the European Central Bank has yet to lift interest rates – leaving it well behind the Fed.
In Asia, Hong Kong and mainland Chinese equity markets led losses after data showed China's economy grew just 0.4 per cent in the second quarter as it was battered by COVID lockdowns in major cities including Shanghai and Beijing.
The reading was well off the 1.6-per cent growth predicted by analysts in an AFP survey.
Elsewhere, traders are keeping tabs on US President Joe Biden's visit to the Middle East as he tries to persuade Saudi Arabia to bring down high oil prices by pumping more crude.