Europe stocks close lower as German economy stagnates; Bank of Japan surprises with policy tweak

Inflation showed further signs of cooling in June, according to a gauge released Friday that the Federal Reserve follows closely.

The personal consumption expenditures price index excluding food and energy increased just 0.2% from the previous month, in line with the Dow Jones estimate, the Commerce Department said.

So-called core PCE rose 4.1% from a year ago, compared to the estimate for 4.2%. The annual rate was the lowest since September 2021.

— Jeff Cox

The top mover of the session in early afternoon trade was smart lighting manufacturer Ams Osram, whose shares surged 18% after the company announced a new portfolio focus and delivered second quarter results in line with guidance.

At the bottom of the Stoxx 600 index, French engineering and IT firm Alten slid 7.6% on earnings that showed a slowdown in growth in the second quarter.

Pharmaceuticals giant AstraZeneca climbed 5% after beating Q2 estimates, while bank Natwest was up 3.2% as it reported a jump in first-half profit.

— Jenni Reid

Colin Hunt, CEO of Allied Irish Bank, discusses its earnings for the first half of the year.

Seijiro Takeshita, professor of management and information at the University of Shizuoka, discusses what the Bank of Japan's loosening of its yield curve control policy means for the economy and markets.

Germany's economy failed to show any growth in the second quarter, according to official data. Analysts had expected the country to eke out a 0.1% increase in GDP.

Annually, Europe's biggest economy contracted by an adjusted 0.2% on the year.

"The flash estimate of German GDP growth shows that the eurozone's largest economy stagnated in the second quarter and seems to be stuck in the twilight zone between stagnation and recession," ING's Global Head of Macro Carsten Brzeski said in a note following the release.

He advised caution over the figures, given the number of recent revisions to flash estimates.

"Looking ahead, recently released sentiment indicators do not bode well for economic activity in the coming months," Brzeski added.

"In fact, weak purchasing power, thinned-out industrial order books, as well as the impact of the most aggressive monetary policy tightening in decades, and the expected slowdown of the US economy, all argue in favour of weak economic activity."

Spain's economy meanwhile grew by 0.4% in the second quarter over the previous three months, preliminary data showed, expanding in line with expectations. On an annual basis, GDP came in at 1.8% for the country, falling short of predictions near 2%.

— Katrina Bishop

French gross domestic product grew by 0.5% in the second quarter, national statistics showed, well above a forecast of 0.1% in a Reuters poll of economists.

GDP growth was 0.1% in the first quarter.

Official figures also published Friday put French consumer price inflation at 4.3% in July, a slight decline on 4.5% in June. Inflation was 5% on an EU-harmonized basis.

The figures will be seen as an encouraging sign for the euro zone, given economic stagnation in Germany and concerns over the impact of higher rates.

— Jenni Reid

European stocks were seen opening in negative territory Friday, according to IG data.

The U.K.'s FTSE 100 was seen down 17 points at 7,694, with France's CAC 40 lower by 25 points at 7,447 and Germany's DAX down by 40 points at 16,366.

— Jenni Reid

Yields for 10-year Japanese government bonds stood at 0.539% after the Bank of Japan announced an adjustment in its stance for its yield curve control policy.

This is the first time 10-year JGB yields have hit this level since September 2014.

The BOJ said it will still allow yields to fluctuate in the range of around plus and minus 0.5%, but it will "conduct yield curve control with greater flexibility, regarding the upper and lower bounds the range as references, not as rigid limits, in its market operations."

Separately, Japan's central bank held its benchmark policy rate at -0.1%.

— Lim Hui Jie

Shares of Japanese banks and financials surged after the Bank of Japan announced that it will adjust its stance on its yield curve control policy Friday. 

Among the major banks, Mitsubishi UFJ Financial Group led gains in the sector and was up 4.63%, while Sumitomo Mitsui Financial Group climbed 3.96% and Mizuho Financial Group gained 4.16%.

Despite this, the broader Nikkei 225 index led losses in Asia, tumbling almost 2% after the BOJ announcement.

— Lim Hui Jie

Goldman Sachs has named a number of Chinese stocks to buy after authorities announced a number of major fiscal stimulus measures this week.

While structural growth concerns remain, the meeting "reaffirms our view that the policy put has been activated, and the window for a tactical bounce for Chinese stocks is now open," Goldman analysts said in a July 26 research note.

CNBC Pro subscribers can read more here.

— Lucy Handley

Much of the market gains this year has been dominated by tech stocks.

Investors are wondering if the U.S. Federal Reserve is done raising rates after its 25 basis-point hike on Wednesday. Still, uncertainty looms ahead for the tech sector.

For those looking outside of tech, Morningstar data shows that non-tech or growth funds have also been among the top performing for the last five years.

Here's the list, and their top holdings.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Morgan Stanley has named three stocks to buy and three to sell as it revealed its cautious stance on the global office spaces sector.

The Wall Street bank has forecast an oversupply of office space that could last more than a decade while facing headwinds from the rise in working from home, increasing capitalization rates, and expensive refinancing challenges.

CNBC Pro subscribers can read more here.

— Ganesh Rao