MARKET WRAPS

Stocks:

European shares were on the rise Friday while yields on global government bonds steadied following the U.S. Treasury's surprise bond market intervention.

European bond yields slipped slightly following weaker-than-expected economic data, easing the outlook for sustained rate hikes on the continent.

Meanwhile, oil prices edged down but were still headed for a weekly gain of around 5% after President Trump vowed to launch sweeping measures aimed at further isolating Iran's economy.

"With the Middle East crisis showing few signs of easing, the risk of further disruption to regional energy flows continues to support crude and refined product prices," Saxo Bank said.

In Europe and parts of Asia, business activity has continued to grow in the face of an extended period of high energy prices, uncertainty about the course of the war between the U.S. and Iran, and rising borrowing costs, according to a series of surveys released Friday.

In the U.K., government borrowing rose despite record income tax revenue while consumer sentiment continued to pick up this month despite lingering geopolitical uncertainty.

U.S. Markets:

Stock futures were up Friday on pace to gain back some of Thursday's sharp losses.

Investors are now awaiting August's flash manufacturing purchasing managers' index, due to be released at 9:45 a.m. EST.

Forex:

The euro rose.

Sterling stayed weak against the euro, not far from Thursday's three-week low after data revealed U.K. public finances deteriorated more than expected while retail sales were weak.

The dollar weakened against a basket of currencies amid uncertainty about whether the Federal Reserve will raise interest rates despite a solid U.S. economic backdrop.

The DXY Index remained around 98.8 points during the Asian session, but its outlook remained weak amid concerns about U.S. debt, said CBA. Bonds:

The 10-year Bund yield traded steady after a weaker-than-expected print of flash estimate August PMI data, having earlier traded marginally higher.

The 10-year French government bond yield trimmed its rise after a weaker-than-expected flash estimate purchasing managers' index reading for August.

Treasury yields were slightly higher in early trade as investors remained cautious despite the Treasury's announcement Wednesday of an increase in securities buybacks. "Concerns about large budget deficits and extensive borrowing from tech companies seem to be back in focus," SEB said.

Energy:

In early European trading, Brent crude was down 0.3%, while WTI futures slipped 0.5%.

Metals:

Gold prices rose above $4,600 a troy ounce and are headed for a weekly gain of 4%, buoyed by concerns over the U.S. government debt and borrowing costs. Gold chart

Comex gold futures' bullish momentum was getting stronger, said RHB Retail Research. The latest price movements on the daily chart, together with rising relative strength index, show that bullish momentum is in play.

Iron ore

Iron ore edged lower in early trading. Prices are under pressure on expectations of ample supply in the second half of the year, Nanhua Futures said.

EMEA HEADLINES

Italy's Monte dei Paschi Makes $40 Billion Move to Buy Rival Banks

Banca Monte dei Paschi di Siena is launching all-share bids for its Italian peers Banco BPM and Banca Generali as it fights off a takeover offer from Intesa Sanpaolo.

The Italian lender-widely considered the world's oldest bank still in operation-said Friday that it is seeking to buy up to 1.52 billion shares of Banco BPM and offering 1.567 of its shares for each Banco BPM share. The bank is offering 6.958 of its shares for each Banca Generali share.

U.K. Government Borrowing Rose Despite Record Income Tax Revenue

The U.K. government borrowed more in July than a year earlier as an increase in spending more than offset record revenues from income taxes, although its budget deficit for the first four months of the fiscal year fell.

The Office for National Statistics on Friday said the government had a budget deficit of 1.8 billion pounds ($2.45 billion), an increase of 700 million pounds from July 2025.

Europe, Asia See Pickup in Business Activity Despite Headwinds

Business activity in Europe and parts of Asia has continued to grow in the face of an extended period of high energy prices, uncertainty about the course of the war between the U.S. and Iran, and rising borrowing costs, according to a series of surveys released Friday.

A lack of progress on reopening the Strait of Hormuz or reaching a deal to end the nearly six-month war has kept energy prices high, while a rise in yields on government bonds is pushing up borrowing costs for households and businesses.

Private Credit's Next Big Thing Is $1 Trillion in British Pensions

LONDON-Private credit giants have found a $1 trillion-plus source of capital to invest: dowdy old British pensions.

London's Standard Life said on Thursday it struck a deal to invest in private-market assets supplied by buyout company CVC Capital Partners, Goldman Sachs and PGIM, the asset-management arm of Prudential Financial. The U.K. insurer said the partnership would help boost its business taking over the management of defined pension plans from companies.

GLOBAL NEWS

Europe, Asia See Pickup in Business Activity Despite Headwinds

Business activity in Europe and parts of Asia has continued to grow in the face of an extended period of high energy prices, uncertainty about the course of the war between the U.S. and Iran, and rising borrowing costs, according to a series of surveys released Friday.

A lack of progress on reopening the Strait of Hormuz or reaching a deal to end the nearly six-month war has kept energy prices high, while a rise in yields on government bonds is pushing up borrowing costs for households and businesses.

Japan Inflation Picks Up as Rate-Boost Bets Firm

TOKYO-Japan's consumer inflation picked up last month as the energy shock caused by the Middle East conflict rippled out across goods, firming expectations that the next interest-rate hike is around the corner.

Excluding fresh food, consumer prices climbed 1.8% in July from a year earlier, compared with June's 1.6% increase, government data showed Friday. That was in line with the consensus forecast of economists polled by data provider Quick.

Bessent's 'Big Toolkit' Leaves Investors Guessing About Next Treasury Surprise

Treasury Secretary Scott Bessent has surprised Treasury investors a couple of times over the past month with aggressive moves to try to keep Treasury yields from rising. Now, a $32 trillion bond market used to stability is bracing for more changes.

Since 1982, the Treasury has embraced the core principle of being regular and predictable, a strategy that has allowed the world's largest issuer of government bonds to issue trillions of debt at the least possible cost to the taxpayer. Officials back then figured that being straight up with investors about their plans kept bonds yields steady and reduced the interest rate they must offer at auctions; sudden changes did the exact opposite.

Politicians Who Once Championed Data Centers Are Now Bashing Them

In November, Texas Gov. Greg Abbott declared his state the "epicenter of AI development" while announcing a $40 billion investment by Google.

Less than a year later, the Republican said he halted approvals of some 1,800 new data centers worth billions of dollars on concerns that they use too much power and water. The move earlier this month drew the ire of President Trump, who this week staunchly defended the centers as an economic engine.

Hong Kong Court Convicts Activists Who Organized Tiananmen Vigils

HONG KONG-A Hong Kong court on Friday convicted two activists who organized large-scale annual memorials for those killed in the 1989 crackdown on pro-democracy protesters in China.

The convictions of barrister Chow Hang-tung and labor organizer Lee Cheuk-yan for inciting subversion conclude one of the last major trials in a yearslong crackdown that followed mass antigovernment protests in Hong Kong in 2019. They were charged under Hong Kong's national security law, which Beijing imposed on the territory in 2020.

Canada Trade Official Says Tariff Deal With U.S. 'Very Close'

OTTAWA-Canada's minister in charge of U.S. trade said Ottawa and Washington are "very close" to finalizing an agreement.

Dominic LeBlanc made the remarks to Canadian reporters Thursday in Washington, following a roughly three-hour meeting with senior trade officials in the Trump administration.

U.S. Begins Deporting Immigrants to Liberia

The U.S. has begun deporting immigrants to Liberia, officials in the West African country said, part of President Trump's wider plan to send migrants to third-party countries.

A plane carrying an initial group of deportees landed Thursday at the Roberts International Airport, about 40 miles east of the capital in Monrovia, according to a spokesman for the Liberian government. The flight is part of a broader plan, announced by Liberian officials on Tuesday, for the country to take up to 1,200 deportees in the next year.

Write to priscila.barrera@wsj.com