Commodities and China investors waved a relieved goodbye to July on Friday following a brutal sell-off that has revived fears about the global economy and overshadowed more encouraging news from the U.S. and Europe.
There were signs that the rout wasn't over yet as Chinese stocks - which have suffered their worst monthly drop in 6 years - wobbled again, oil prices slipped following a more than 15 percent July slump and metals from industrial copper to precious gold hit multi-year lows.
That happened despite a pause in the dollar's recent rise, which has been compounding the commodity pressure as signs build that the U.S. Federal Reserve is heading for its first rate hike in almost a decade.
European markets, relieved that Greece looks to be staying in the euro after its last-minute deal this month, saw a solid start to the day to cap a more than 4 percent monthly rise for stocks [.EU] and the biggest drop in Italian bond yields in two years. "The main moves this week have been the continued broad-based weakness in commodities," said Societe Generale strategist Alvin Tan. "Essentially they have been on the downtrend for a month and of course we have been on a roller coaster ride in China equities and that has affected sentiment."
European stocks were underpinned by some upbeat company earnings. Shares in UCB surged 5.2 percent after the Belgian pharmaceutical company raised its 2015 forecasts and bank BNP Paribas gained 3.5 percent after its Q2 revenue rose nearly 16 percent.
Economists were waiting for July euro zone inflation and unemployment data due at 0900 GMT and for in-depth U.S. wage data due later. But just as important remained commodities and China. Copper, considered a bellwether for global economic activity, was facing a 9 percent monthly loss as it stumbled to $5,238 an tonne. Gold was down over 7 percent on the month at $1,081.95 an ounce as it chalked up its longest run of week-on-week falls in 16 years.