Portugal Colonial - European stocks surge on bargain hunting

Frankfurt jumped 3.0 percent and Paris gained 2.1 percent in afternoon trading, while London won 1.4 percent to shrug off earlier Asian losses.

Oil was slightly higher following Iran supply fears, but remained well below the 14-year peak near $140 hit Monday on worries of a severe fallout from key producer Russia's invasion of Ukraine.

The pound and yen hit multi-year dollar lows, as spiking US inflation fanned expectations the Federal Reserve would deliver aggressive interest rate hikes.

- First weekly rise since war -

"European stocks are set for their first weekly rise since the start of the war, as investors digest the latest... (ECB) policy decision and a pleasant surprise from UK GDP data," said City Index analyst Fiona Cincotta.

Investors were reassured after European Central Bank head Christine Lagarde on Thursday said the ECB would "take whatever action is needed" to shield the eurozone from Ukraine fallout and sky-high energy prices.

The central bank froze borrowing costs and pushed back the start of a potential interest rate hike, despite record euro-area inflation.

Sentiment also brightened Friday as data showed the UK economy rebounded 0.8 percent in January after a 0.2-percent decline in December, as Omicron coronavirus curbs were lifted.

Markets have nevertheless been rocked ever since Russia shocked the world by invading its neighbour Ukraine on February 24.

"For now, the markets appear to have priced in the bad news," added Cincotta.

"Bargain hunters are out which is perhaps not surprising given the steep declines we have seen over the past three weeks."

Oil jumped Friday after the European Union revealed talks it is chairing about the revival of the 2015 nuclear accord with crude producer Iran must be paused, days after fresh demands from Russia complicated negotiations.

- Red-hot US inflation -

Wall Street had slid Thursday as peace talks between Russia and Ukraine stalled, with sentiment also dented by news that US inflation hit a new 40-year high of 7.9 percent in February.

Asian equities mostly fell Friday as traders resumed their Ukraine-fuelled selling after the previous day's bounce.

News of red-hot US inflation comes ahead of next week's Federal Reserve policy meeting, where it is expected to announce the first of what could be up to seven interest rate hikes this year.

While a phase of tightening is certain, speculation has been rife about how many and how steep the rises will be.

The war has given officials an extra headache as the surge in oil markets will add upward pressure to consumer prices, though the central bank must tread a fine line between fighting inflation and trying to prevent a recession.

Oil has been extremely volatile ever since Moscow's invasion, with traders still fretting over Western moves to ban Russian crude.

"It's been a rollercoaster ride for oil this week, and for some, the weekend cannot come quick enough," said Stephen Innes, Managing Partner at SPI Asset Management.

- Key figures around 1320 GMT -

London - FTSE 100: UP 1.4 percent at 7,200.75 points

Frankfurt - DAX: UP 3.0 percent at 13,850.72

Paris - CAC 40: UP 2.1 percent at 6,334.73

EURO STOXX 50: UP 2.5 percent at 3,744.23

Brent North Sea crude: UP 0.2 percent at $109.51 per barrel

West Texas Intermediate: UP 0.5 percent at $106.57

Tokyo - Nikkei 225: DOWN 2.1 percent at 25,162.78 (close)

Hong Kong - Hang Seng Index: DOWN 1.6 percent at 20,553.79 (close)

Shanghai - Composite: UP 0.4 percent at 3,309.75 (close)

New York - Dow: DOWN 0.3 percent at 33,174.07 (close)

Euro/dollar: UP at $1.0995 from $1.0986 Thursday

Pound/dollar: UP at $1.3098 from $1.3086

Euro/pound: UP at 83.96 pence from 83.95 pence

Dollar/yen: UP at 116.86 yen from 116.14 yen

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G.M.Castelo--PC