LONDON World stocks and oil prices edged back up on Friday but remained on course for one of their worst weeks of the year following a sell-off triggered by global economic growth concerns.
Surprisingly weak Chinese and U.S. economic data, on top of the International Monetary Fund's decision to trim its global growth forecast, hit commodities from gold to oil this week and brought the recent rally in equity markets to an abrupt halt.
Top European shares opened 0.4 percent on Friday, as London's FTSE, Frankfurt's DAX and the Paris CAC-40 rebounded 0.2, 0.1 and 0.6 percent respectively.
But four straight days of losses left them down 2.5 percent on the week, their worst since November last year and a fall that has pushed them back below where they started the year.
"The weaker Chinese data has combined with the numbers from the U.S. and it has been translated by people as that the global economy is actually at a much weaker stage than has been price in," said Daiwa Securities economist Tobias Blattner.
"I think the correction could continue if we get a snap election in Italy, but if you ignore the political risk I think we are going to go into a phase of muddling through where shares stay roughly where they are, but with a lot of volatility."
In the currency market, the yen fell back to 99.10 yen to the dollar after Japan said the Group of 20, which is meeting in Washington, had accepted that the Bank of Japan's sweeping monetary expansion is aimed at beating deflation rather than competitively weakening the yen.
The prospect of lower global growth, and with it weaker demand for goods used in industrial production, has weighed most heavily on commodity markets this week.
Investors in U.S.-based funds pulled a record $2.7 billion out of commodities and precious metals funds in the week ended April 17, Thomson Reuters Lipper data showed.
Oil was 0.5 percent higher to $99.59 a barrel as European trading began to gather pace but like a broad range of commodities was set for its third drop in as many weeks having started on Monday at $103.
Copper, a gauge for manufacturing and China-related growth, was hovering at $7,000 a tonne have broken below the threshold for the first time since late 2011 on Thursday.
In Asian trading, spot gold ticked back above $1,400 an ounce as buyers continued to filter back into the market, but the brutal sell-off at the start of the week left it heading for a fourth week of losses.
"This gives us some confidence that as panic selling passes, prices can rebound by $100-150 an ounce and trade in the $1,400-$1,550 range over the next 3-6 months," said Mark Pervan, global head of commodity strategy at ANZ, referring to a pickup in physical gold sales in India and China.
(Reporting by Marc Jones; editing by Philippa Fletcher)