Investors are seeking to preserve January's upbeat mood amid fears about slowing economic growth and restrictive monetary policy.

Investors are seeking to preserve January's upbeat mood amid fears about slowing economic growth and restrictive monetary policy. European stock markets begin slightly higher on Friday.

Germany's DAX is up more than 7% year to far, helping European equities have a great start to the year on expectations that the anticipated economic slowdown in 2023 won't be as bad as originally anticipated.

These improvements are still fragile, however, as European Central Bank President Christine Lagarde reiterated the necessity of bold monetary policy measures on Thursday at the World Economic Forum in Davos, Switzerland, warning that inflation statistics remained "far too high."

Additionally, according to the minutes from the ECB's policy meeting last month, policymakers were split on whether to hike interest rates by 50 or 75 basis points in December.

In the end, the central bank decided to raise its deposit rate by 50 basis points, which is a little decrease from the three consecutive greater hikes of 75 basis points that were implemented earlier in 2022.

German producer prices were affected by this tightening; they increased by 21.6% annually but decreased by 0.4% in December, which was less than projected.

The Bank of England increased interest rates by an another 50 basis points in December after raising them by a total of 325 basis points in 2022 alone, to their highest level since late 2008.

This led to gloomy news for merchants over the holiday season as U.K. retail sales dropped 1% for the month of December and 5.8% annually as the cost of living problem and monetary tightening restrained discretionary spending.

Oil prices gained on Friday, setting the stage for a second straight positive week, as investors maintained their confidence that the improving economic outlook for China would lead to higher demand from the largest petroleum importer in the world.

The Organization of Petroleum Exporting Countries and the International Energy Agency both predicted earlier this week in their monthly reports that a Chinese economic rebound will lead to record-high oil consumption in 2023.

After the Energy Information Administration announced an increase of more than 8 million barrels on Thursday, the market was able to ignore data revealing a larger-than-expected build in U.S. inventories because to this confidence.

Key events today:

• ECB President Lagarde speaks (10:00 GMT)
• Canadian Core Retail Sales (MoM for Nov) (13:30 GMT)
• U.S. Existing Home Sales (Dec) (13:30 GMT)

(investing.com, reuters.com)