LONDON, July 29 (Reuters) – Global stocks rose on Friday, on course for their best month since the end of 2020, as eurozone growth beat expectations, while the dollar fell as traders waited to new US data for clues on the outlook for rates.

As inflation rises in major markets and central bankers fight to raise rates without killing growth, riskier markets like equities tend to react positively to any perceived easing by policymakers.

After Thursday’s data showed the US economy contracted in the second quarter, stocks rose as traders bet rates would rise more slowly. Eurozone figures on Friday, meanwhile, beat expectations, but recession fears are growing as energy inflation continues to bite amid conflict in Ukraine.

The MSCI World Index (.MIWD00000PUS) last rose 0.3%, on track for a monthly gain of nearly 6%, its best since November 2020, buoyed by broad gains in European markets , with the STOXX Europe 600 (.STOXX) up 0.9%.

U.S. stocks are set to gain at the open, with futures for the S&P 500 and Nasdaq up 0.8% and 1.1%, respectively, with all eyes on new earnings and earnings data. consumer prices for indices on the health of the economy.

Despite the positive end to the month for equities, Mark Haefele, chief investment officer at UBS Global Wealth Management, said investors should proceed with caution.

“In the short term, we believe the risk-reward ratio of broad equity indices will be muted. Stocks are forecasting a “soft landing”, but the risk of a deeper “collapse” in economic activity is high.

Some of that concern had played out overnight in Asian stock markets, after Beijing failed to refer to its full-year GDP growth target following a meeting of high level of the Communist Party. Read more

MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) fell 0.3%.

News from the previous session that U.S. gross domestic product shrank 0.9% last quarter, on top of a 1.6% contraction in the previous quarter, weighed on the country’s bond yields and the greenback, but both recorded a partial recovery on Friday.

The yield on the benchmark 10-year treasury bills rallied slightly from overnight lows to trade at 2.7029%, while the yield on the two-year bill, which typically trades in in line with interest rate expectations, was 2.8703%.

After flirting with positive territory earlier, the dollar was last down 0.4% against a basket of its major peers – but still on track for a second month of gains.

Futures markets now expect US interest rates to peak by December this year from June 2023 and the Federal Reserve will cut interest rates by nearly 50 basis points next year to support the slowdown in growth. [0#FF:]

Amid a slowing U.S., second-quarter eurozone GDP data beat expectations, rising 0.7%, though growth in the region’s largest economy, Germany , has been delayed.

In response, the yield on German 10-year bonds – the benchmark for the euro zone – last rose to 0.89%.

Across commodities, Brent crude and U.S. West Texas Intermediate crude futures extended early gains and last rose around 2.3% as concerns over oil shortages supply before the next meeting of OPEC ministers offsetting doubts surrounding the economic outlook.

Gold lost some of its initial gains to trade down 0.4% at $1,759 an ounce, helped by dollar weakness.

Additional reporting by Kanupriya Kapoor and Tom Westbrook; Editing by Angus MacSwan, Jacqueline Wong and Chizu Nomiyama

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