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European Markets Seen Opening On Cautious Note


The mood in European markets is likely to be a bit cautious on Friday with investors reacting to conflicting reports about trade talks between the world's two largest economies. Also, after three successive days of gains, traders may look to book some profits.

According to reports, China's state media signaled a lack of interest in resuming trade talks with the U.S. under the current threat to escalate tariffs.

U.S. Treasury Secretary Steven Mnuchin said earlier this week that American officials "most likely will go to Beijing at some point" in the near future to continue trade talks. He subsequently said he has "no plans yet to go to China."

Asian stock markets, with the exception of Shanghai and Hong Kong, are mostly higher, tracking overnight gains on Wall Street, where upbeat corporate earnings and encouraging data on housing starts, jobless claims and Philadelphia-area manufacturing activity bolstered investor sentiment.

Besides tracking earnings reports and other corporate news, investors will also be looking for trade related news for direction.

Optimism about any swift solution to U.S.-China trade conflict has faded following the decision of the Trump administration to block Huawei Technologies from buying vital American technology.

The U.S. government's decision to delay imposing tariffs on cars imports from European Union triggered hectic buying in European automobile stocks on Wednesday, but most of the stocks in the sector turned south on Thursday.

A report from European Automobile Manufacturers' Association on Friday showed new car sales dropped for an eighth consecutive month, declining by 0.4% in the EU in the month of April, compared to a year ago. In March, car sales were down 3.9%.

While demand for cars increased in Italy, France and Spain, sales were down in the U.K. and Germany.

Later in the morning, Eurostat is scheduled to release final euro area consumer prices and construction output data.

Economists expect eurozone final inflation to match the flash estimate of 1.7 percent in April. Core inflation is seen at 1.2 percent, in line with preliminary estimate published on May 3.

European stocks ended higher on Thursday, extending gains to a third straight session, as trade tensions eased despite U.S. President Donald Trump declaring a national emergency with respect to the threats against information and communications technology and services.

The Trump administration's decision on Wednesday to defer imposition of tariffs on auto imports from EU by six months continued to aid sentiment.

The pan European Stoxx 600 ended up 1.27%. Among the major markets in Europe, Germany ended sharply higher, with the DAX rising 1.74%. France's CAC ended up 1.37% and the U.K.'s FTSE 100 advanced 0.78%, while Switzerland's SMI ended stronger by 1.9%.

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