(Alliance News) - Stocks in London look set to end the week on the back foot on Friday, following an as-expected rate hike from the European Central Bank but better-than-expected economic growth in the US.

IG says futures indicate the FTSE 100 index of large-caps to open down 56.49 points, or 0.8%, at 7,017.20 on Friday. The index closed up 17.62 points, or 0.3% at 7,073.69 on Thursday.

Sterling was quoted at USD1.1560 early Friday, down from USD1.1573 at the London equities close on Thursday.

European Central Bank President Christine Lagarde sounded tough on inflation on Thursday, but a slight 'dovish tweak' to the central bank's monetary policy statement has sent the euro below dollar parity.

The ECB said interest rates would need to be raised "further" - a slight change in language after it previously said rates would need to be hiked over the "next several meetings".

As expected, the Frankfurt-based central bank lifted its key policy rates by 75 basis points on Thursday. This takes the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility to 2.00%, 2.25% and 1.50%, respectively.

The ECB has now hiked by 200 basis points over the past three meetings. Lagarde told reporters the ECB "still has ground to cover".

The euro traded at USD0.9978 early Friday, down from USD1.0064 late Wednesday.

Turning to Japan's central bank, the Bank of Japan stuck to its ultra-loose monetary policies on Friday, even as the yen comes under pressure from aggressive tightening by the US Federal Reserve and other central banks.

The stark contrast between Japanese and US monetary policy has caused the yen to plummet to 32-year lows against the dollar, prompting the government to intervene to prop up the currency.

Against the yen, the dollar was quoted at JPY146.38 early Friday in London, up from JPY145.90 late Thursday.

In a statement after a two-day policy meeting, the BoJ on Friday said it would keep measures aimed at boosting the world's third-largest economy, including its benchmark rate of minus 0.1%.

But it also raised its inflation forecast for fiscal 2023 to 2.9% from 2.3% in July, driven by higher energy and food prices.

The Japanese Nikkei 225 index was down 0.7% in late trade.

Elsewhere in Asia, the Shanghai Composite was down 1.7% and the Hang Seng index in Hong Kong gave back 3.6%.

The S&P/ASX 200 stock index in Sydney closed down 0.9%.

In the US on Thursday, the Dow Jones Industrial Average closed up 0.6%, while the S&P 500 closed down 0.6% and the tech-heavy Nasdaq Composite ended 1.6% lower.

The US economy grew at a faster pace than expected in the third quarter, according to the latest estimate from the US National Bureau of Economic Research on Thursday, as weekly jobless claims ticked up, but came in lower than anticipated.

Gross domestic product grew by 2.6% annually in the third quarter of 2022, growth coming in higher than FXStreet-cited consensus of 2.4%. The figure shows the US economy is coping with high interest rates better than the market had expected.

US GDP had shrunk at an annual pace of 0.6% in the second quarter.

Separately, the US Department of Labor said Thursday that the number of workers filing for first time unemployment benefits increased last week, though by less than expected.

The combination of better-than-expected economic growth, and lower-than-expected unemployment claims will put pressure on the US Federal Reserve to continue with its large interest rate hikes.

Tech earnings continued, this time numbers from Apple and Amazon were up.

Apple reported a strong fourth-quarter result in a record year, despite noting a challenging and volatile macroeconomic backdrop.

In the three months ended September 24, the California-based iPhone-maker reported net income of USD20.72 billion, up 0.8% from USD20.55 billion the previous year.

"Our record September quarter results continue to demonstrate our ability to execute effectively in spite of a challenging and volatile macroeconomic backdrop," said Luca Maestri, Apple's chief financial officer.

Apple shares rose 0.4% in the after-hours session in New York.

Amazon, however, was not as cheery, as it sunk 13% in after-hours trade.

The e-commerce platform reported a decrease in quarterly net income on foreign exchange headwinds, but noted a rise in sales.

Gold was quoted at USD1,662.00 an ounce early Friday, marginally lower from USD1,662.60 on Thursday evening in London. Brent oil was trading at USD93.99 a barrel, soft from USD94.75 late Thursday.

The economic calendar has GDP readings from Germany at 0900 BST, before the personal consumption expenditures inflationary gauge from the US at 1330 BST. Core PCE is the Fed's preferred inflationary measure.

In Friday's UK corporate calendar, miner Glencore and British Airways-owner International Consolidated Airlines publish third-quarter results.

By Paul McGowan; paulmcgowan@alliancenews.com

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