(Alliance News) - Stocks in London are set to open lower on Friday, as stubborn US inflation data complicates market projections of interest rates, and the latest data suggests China's economic recovery continues to falter.

IG says futures indicate the FTSE 100 to open down 13.0 points, 0.2%, at 7,631.78 on Friday. The index of London large-caps closed up 24.75 points, 0.3%, at 7,644.78 on Thursday.

In the US on Thursday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.5%, the S&P 500 and the Nasdaq Composite both closed down 0.6%.

The US yearly inflation rate was unmoved at 3.7% in September, according to the Bureau of Labor Statistics. It had been expected to cool to 3.6%, according to FXStreet-cited consensus.

"At the moment we appear to be in no-man's land when it comes to the prospect of further rate hikes with a still resilient US economy, and rate policy that is struggling to return inflation to target," said CMC Markets' Michael Hewson.

"The reality is that the path to 2% may take much longer to achieve than originally thought and markets are slowly starting to realise the direction of travel may well not be in a straight line."

Sterling was quoted at USD1.2206 early Friday, a touch higher than USD1.2209 at the London equities close on Thursday. The euro traded at USD1.0548, little changed from USD1.0547. Against the yen, the dollar was quoted at JPY149.64, down versus JPY149.77.

In Asia on Friday, the Nikkei 225 index in Tokyo was down 0.6%. In China, the Shanghai Composite was down 0.8%, while the Hang Seng index in Hong Kong was down 2.2%. The S&P/ASX 200 in Sydney closed down 0.6%.

The latest series of Chinese data pointed to ongoing weakness in the country's economic recovery, though export data was slightly better than expected.

Official consumer price inflation data showed prices for goods and services remained unchanged in September compared to the same month last year, a warning signal of impending deflation. Analysts had expected a slight price increase, after annual inflation of 0.1% in August.

Meanwhile, Chinese trade also continued to slump, but improved from the previous month. The National Bureau of Statistics said exports fell 6.2% annually in September, which was less severe than the FXStreet-cited market consensus of an 8.3% fall. It was also softer than the 8.8% decline seen in August. Imports fell 6.2% from the year before, which was slightly worse than forecasts of 6.0%. Imports had fallen 7.3% in August.

Gold was quoted at USD1,876.86 an ounce early Friday, higher than USD1,871.43 on Thursday. Brent oil was trading at USD86.62 a barrel, edging up from USD86.58.

Friday's economic calendar has eurozone industrial production data at 1000 BST.

The UK corporate diary has a trading statement from emerging markets-focused asset manager Ashmore.

Over in New York, the banking sector comes into focus, with third-quarter results from JPMorgan Chase, Wells Fargo and Citi.

By Elizabeth Winter, Alliance News senior markets reporter

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