A white-knuckle ride for global markets this week looked set to end with a whimper on Friday, with equities and commodities giving up some of their eye-popping bounces as investors turned their focus back to central banks' ability to avert deflation.
While insignificant compared to the near-10 percent drops and rebounds seen on some markets this week, the choppy trade left some blue-chip European indexes on track to end the week slightly lower - even as emerging markets, the epicentre of global growth worries, were set for a higher finish.
China's central bank injected 60 billion yuan ($9.39 billion) into money markets on Friday, the second such move this week, while inflation data out of Germany later on Friday is likely to set the tone for the European Central Bank's meeting next Thursday as deflationary pressures rise around the world.
Although global equities are back to where they were a week ago, having recouped their losses from a bruising sell-off driven by worries over China's economic slowdown, strategists have cut end-of-year market forecasts and data for Aug. 20-26 showed a record $28 billion in outflows from equity funds.
"Current equity and bond yields suggest that investors are shifting towards pricing in a global recession ... We think that such fears are premature," Citi strategists wrote in a note to clients, describing the central-bank-driven bull market of the past six years as one that was "ageing" but very much alive.
The MSCI All-Country World index was up 0.3 percent on the day and also on the week.
The pan-European FTSEurofirst 300 index was down 0.5 percent at 0929 GMT, with benchmark indexes in London, Paris and Frankfurt down 0.1 to 0.7 percent.
U.S. crude fell 27 cents to $42.27 per barrel, with Brent also down 38 cents, pulling back from their biggest one-day bounce since 2009 on Thursday.
Global oil markets have fallen by a third since May and are still well under half their value of a year ago thanks to fuel oversupply and sluggish demand.
However, there was no sign of a rush into traditional safe havens such as the U.S. dollar or German sovereign bonds. The U.S. dollar was flat against a basket of six major currencies , while German 10-year yields were also flat on the day.
Emerging markets were big winners, with the MSCI emerging markets equity index up 0.7 percent and some fund managers saying signs of value had begun to appear.
"The bull market in shares is getting long in the tooth but QE (quantitative easing) is still a major factor for markets in Europe, the U.S. and Japan ... Policymakers are also likely to defer planned rises in interest rates," said John Chatfeild-Roberts, head of the Jupiter Independent Funds Team.