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European stock markets make small gains

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Traders wait for news of Trump-Xi call

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Fed rate cut keeps investors upbeat

(Updates after European market open)

By Elizabeth Howcroft

PARIS, Sept 19 (Reuters) - European stock markets made

small gains on Friday, on track for a modest weekly advance

after the U.S. Federal Reserve's rate cut helped to push markets

higher.

The U.S. Federal Reserve cut interest rates by a quarter of

a percentage point on Wednesday, for the first time since

December, while Norway and Canada also cut rates.

Wall Street closed at a record high on Thursday but during

Asian trading the Nikkei retreated from record highs

after the Bank of Japan flagged a further unwinding of its

stimulus policies.

At 0923 GMT, the MSCI World Equity index was little changed

on the day. The pan-European STOXX 600 was up

0.1%, and London's FTSE 100 was flat.

Investors are betting that central bank rate cuts will boost

stocks further.

"For the next few weeks, our view is that we continue to

keep risk-on orientation in our portfolios, we continue to

overweight equities in the portfolio," said Amelie Derambure,

senior multi-asset portfolio manager at Amundi.

"Our stance is that the market should continue to creep

higher in the coming weeks, with some volatility as always."

The Fed stopped short of endorsing market expectations for a

clear string of rate cuts, emphasising a meeting-by-meeting,

data-dependent approach. The Fed's tone, along with the wide

range of views within the central bank, disappointed some

investors, who had hoped the stock market would be boosted by a

rapid shift to lower rates, analysts said.

Markets are waiting for any news of a call between Chinese

President Xi Jinping and U.S. President Donald Trump, which is

expected to cover the TikTok deal and tariffs.

The British pound fell, down 0.4% on the day at $1.3504

, and UK gilt yields rose, after data showed a surge in

public sector borrowing.

The Bank of England on Thursday kept rates on hold, but

slowed the pace at which it is unloading the government bonds it

purchased in previous crises.

The U.S. dollar, which hit its lowest since 2022 this week,

was a touch higher, with the U.S. dollar index up 0.2% at 97.509

.

The yen strengthened against the dollar, with the pair at

147.82.

European government bond yields rose, with Germany's 10-year

yield at 2.7361% . While shorter-dated bonds have

benefited from expectations for rate cuts, longer-dated bond

yields have risen on investor concern about government finances.

The Bank for International Settlements warned this week that

record global share prices appear increasingly disconnected from

signals in the bond market that investors are concerned about

government debt.

The 10-year U.S. Treasury yield was at 4.1255%.

Oil prices were down, as traders' worries about fuel demand

outweighed the boost oil prices would typically get from a U.S.

rate cut.

Gold was up 0.4% at $3,656.4, heading for its fifth straight

week of gains.