A look at the day ahead in European and global markets from

Ankur Banerjee

Markets are back to hoping for a resolution to the Iran war,

seizing on a few positive words from Washington and Tehran, even

as both sides said they remain far apart on the critical issues

of nuclear enrichment and control over the Strait of Hormuz.

Stocks rose after U.S. Secretary of State Marco Rubio said

there had been "some good signs" in talks to end the nearly

three-month-old war.

However, he also said any deal that involved Iran imposing a

toll system in the crucial strait would be unacceptable, and

Iran's Supreme Leader ordered that the country's

near-weapons-grade uranium should not be sent abroad.

The conflicting messages out of the U.S. and Iran have added

to uncertainty, keeping the U.S. dollar near a six-week high on

safe-haven demand, and with investors pricing in higher rates in

much of the world because of inflation.

Bond yields were relatively calm on Friday after surging

across the world earlier this week due to shifting interest rate

expectations. Markets are pricing in the prospect of hikes by

the U.S. Federal Reserve later this year.

In Asia, where the oil shock has hit hardest, central banks

have already started to move, with Indonesia surprising markets

earlier this week with a jumbo hike that provided temporary

relief to the rupiah.

The Philippine central bank is considering an off-cycle hike

as its move in April "didn't seem enough", its governor said.

Europe's calendar is filled with economic data and a

sentiment survey from Germany that may provide investors with a

better sense of the deep impact from the Middle East war.

Earnings from Walmart ( WMT ) showed how the oil shock has

sent bargain-hunting shoppers flocking to the retailer's

low-priced groceries and essentials. U.S. retailers have flagged

growing pressure on consumer spending this year.

Key developments that could influence markets on Friday:

* Economic events: Germany Q1 GDP, UK retail sales for

April, Germany Ifo business sentiment survey for May