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Flat European stock futures, watch for Eurozone inflation release.

Investors are anticipating a cautious opening for European stock markets on Friday, as mixed Chinese activity data is digested ahead of the release of crucial inflation data on both sides of the Atlantic. The DAX futures contract in Germany traded 0.1% higher at 02:00 ET (06:00 GMT), while CAC 40 futures in France climbed 0.1%, and the FTSE 100 futures contract in the UK fell 0.1%.

Investors are seeking clarity on the recovery strength of China after the lifting of its COVID-19 restrictions, as well as interest rate outlooks in the US and Europe, as the week, month, and first quarter come to a close. While Chinese service sector activity grew at its fastest pace in 12 years in March, manufacturing activity slowed from the prior month, indicating an uneven recovery in Asia's largest economy and a major export market for European companies.


In Europe, the U.K. economy grew 0.1% on the quarter in the final three months of last year, slightly better than expected, while German retail sales disappointed, falling 1.3% on the month in February. However, Eurozone inflation data, which is expected to show that annual CPI grew 7.1% in March, a reduction from the 8.5% growth the prior month, will be in the spotlight later in the day. Markets have mostly priced in another 50 basis points in hikes from the European Central Bank this year, and a high inflation number is expected to cement this expectation.


The Fed's favorite gauge of inflation, the core PCE price index, is also due later in the session, which could provide clues to the Federal Reserve's next move on interest rates. Policymakers may have to tread carefully while the effects of fragile bank confidence roll through the economy.


In the corporate sector, Rio Tinto is likely to be in focus after agreeing to sell a majority stake in its La Granja copper project in Peru to First Quantum Minerals. Meanwhile, oil prices traded in a subdued manner as traders digested mixed activity data out of China, the world's largest crude importer, ahead of the US inflation release. By 02:00 ET, US crude futures traded 0.2% lower at $74.23 a barrel, while the Brent contract dropped 0.3% to $78.36. Gold futures rose 0.1% to $1,997.80/oz, while EUR/USD traded 0.1% lower at 1.0890.


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