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European Shares Set to Open Lower, Inflation Eyed

European shares were expected to open lower on Friday as fears about bank losses persisted, with investors seeking clues to the future of U.S. interest rates from a key inflation indicator later in the session.

Bookmakers expected Britain's FTSE 100 to open down 7-28 points, Germany's DAX down 25 to 53 points and France's CAC down 19-38 points.

Rumors that Lehman Brothers could suffer a fate similar to the near-collapse of Bear Stearns pushed Lehman's shares down nearly 9 percent in New York. Lehman called the talk "totally unfounded".

Primary dealers more than doubled their direct borrowing from the Federal Reserve to nearly $33 billion a day in the latest week, showing no shortage of the need for cash amid ongoing strains in global money markets.

A top U.S. policymaker said on Thursday that the world's biggest economy could be slipping into recession and the Federal Reserve must cushion the pain, supporting hopes for more rate cuts.

Core PCE data is expected to offer investors more direction.