Most major global stock indices were higher on Friday

London (AFP) - World stock markets mostly rose Friday after a top Federal Reserve official said he would back a small interest rate hike at its next meeting and hinted at a possible summer pause to evaluate how tighter policy has cooled high inflation.

Talk has been swirling that the Fed could hike interest rates by a half-percentage point at its next meeting this month.

However, Atlanta Fed chief Raphael Bostic said Thursday he favoured a quarter-point move instead, denting the dollar and sending government bond yields lower.

“This seemed to placate markets somewhat after being on a relentless ‘higher for longer’ train for the last few days,” said analyst Neil Wilson at trading group Finalto.

Bostic questioned whether rates should go much higher than 5.25 percent from the current 4.5-4.75 percent.

“I let the data guide me,” Bostic said. “If the data continue to come in suggesting the economy is stronger than I had projected, I’ll adjust my policy trajectory.”

A strong run of data had sent chills through trading floors in February – wiping out almost all January’s rally – as investors realised the US central bank had more work to do to control prices.

The unease largely overshadowed optimism about China’s recovery after officials ended three years of strict zero-Covid containment measures that battered the world’s number two economy.

Several Fed policymakers have lined up to insist that while consumer prices are coming down, they are determined to keep hiking rates until they hit their two-percent inflation target.

The latest indicators have led investors to bet on rates hitting a peak of 5.5 percent, though six percent has also been mooted.

Figures this week showed eurozone inflation stubbornly-high in February, leading European Central Bank chief Christine Lagarde to say more tightening was needed.

Market analyst Patrick O’Hare said he believed the market’s reaction to Bostic’s comments were overblown as he’s not a voting member of the rate-setting committee at the current moment.

He said the positive sentiment among investors “could possibly change today if the February ISM Services PMI shows an acceleration from last month in services activity and/or there is an added jump in its prices index.”

The survey data provides an important look into how US non-manufacturing business are faring and was due out at 1500 GMT.

Oil prices fell.

“A decent week for oil prices comes to an end slightly in the red, perhaps a sign of some profit-taking kicking in,” said Craig Erlam, senior market analyst at OANDA trading platform.

He said that despite the drop crude prices are still in the range they have been fluctuating in for months.

“While traders are becoming more optimistic about the Chinese recovery, the risks to the global economy may be increasing as interest rate expectations have risen,” Erlam said.

- Key figures around 1430 GMT -

London - FTSE 100: DOWN 0.2 percent at 7,927.36 points

Frankfurt - DAX: UP 1.4 percent at 15,542.15

Paris - CAC 40: UP 0.7 percent at 7,3337.74

EURO STOXX 50: UP 1.0 percent at 4,224.66

New York - Dow: UP 0.3 percent at 33,112.19

Tokyo - Nikkei 225: UP 1.6 percent at 27,927.47 (close)

Hong Kong - Hang Seng Index: UP 0.7 percent at 20,567.54 (close)

Shanghai - Composite: UP 0.5 percent at 3,328.39 (close)

Euro/dollar: UP at $1.0617 from $1.0597 on Thursday

Pound/dollar: UP at $1.1999 from $1.1946

Euro/pound: DOWN at 88.47 pence from 88.71 pence

Dollar/yen: DOWN at 136.02 yen from 136.77 yen

West Texas Intermediate: DOWN 2.2 percent at $76.45 per barrel

Brent North Sea crude: DOWN 2.1 percent at $82.96 per barrel