European Shares Set To Drift Lower After Hawkish Fed Comments

(RTTNews) - European shares are seen opening on a sluggish note Friday after comments from three Federal Reserve officials suggested that U.S. interest rates are likely to stay higher for longer.

Federal Reserve Bank of Cleveland President Loretta Mester said on Thursday that she expects progress on inflation over time, but at a slower pace than seen last year.

New York Fed President John Williams said that it's important not to overemphasize the latest positive news on inflation.

Richmond Fed President Thomas Barkin said he expects inflation will come down but may take some time.

The U.S. economic calendar remains relatively light today, although the Conference Board's report on leading economic indicators in April may still attract some attention.

Closer home, the final euro zone inflation reading for April and ECB vice president Luis de Guindos's speech at a Banking Sector Industry Meeting may garner investor attention.

Asian stocks followed Wall Street higher, though Chinese and Hong Kong markets held steady on news that authorities are considering government purchases of unsold homes to revive the property market.

A slew of Chinese data released earlier today proved to be a mixed bag, with industrial output expanding more than expected in April, while growth in April retail sales and fixed asset investment for the first four months of the year largely missed expectations.

Oil and gold prices were seeing modest gains in Asian trading as the dollar headed for its largest weekly fall versus the euro in two-and-a-half months on signs of a weakening economy.

U.S. stocks closed lower overnight, a day after all three major averages hit record closing highs following tamer-than-expected consumer price inflation data.

In economic releases, weekly jobless claims indicated some cooling of the job market and factory output was unchanged in April while overall housing starts rebounded in April following a double-digit decline, separate reports showed.

The Dow reached an intraday high of 40,000 for the time before finishing marginally lower. The S&P 500 eased 0.2 percent and the tech-heavy Nasdaq Composite slipped 0.3 percent.

European stocks fell for the first time in nine days on Thursday as investors digested some downbeat earnings.

The pan European STOXX 600 dipped 0.2 percent. The German DAX shed 0.7 percent, France's CAC 40 gave up 0.6 percent and the U.K.'s FTSE 100 closed marginally lower.