European shares fight back as Greek Parliament approves bailout deal

FTSEuroFirst index of leading 300 European shares up 0.5% in early trade

Markets tried to climb off the ropes on Friday, with European stocks regaining some of the week's losses after the Greek parliament approved a third multi-billion euro bailout deal.

That offered some relief to investors underwhelmed by weaker-than-expected euro zone economic growth figures. European stocks were still poised for their worst week in four, though, after China's surprise currency devaluation on Tuesday.

Market sentiment remained fragile. Oil slumped to its lowest since March 2009 and emerging market currencies - notably the Turkish lira and South African rand - slid to historical lows.

In early European trade, the FTSEuroFirst index of leading 300 European shares was up 0.5% at 1,538 points, as was the Euro Stoxx 50 index of leading euro zone shares at 3,349 points.

Germany's DAX and France's CAC40 were both up 0.6%. Britain's FTSE100 was up 0.4%.

Earlier on Friday, the Greek parliament voted to approve the country's third financial rescue by foreign creditors in five years. Prime Minister Alexis Tsipras still faces a confidence vote later this month.

Meanwhile, official figures showed that the German and Italian economies expanded more slowly than expected in the second quarter. The French economy didn't grow at all.

"The weak GDP reading for Germany is also a result of slowing growth in China," said Naeem Islam, chief market analyst at Avatrade. "The recent rout in the Chinese yuan could further damage growth in Germany if the current efforts by the Chinese central bank fail to curb the currency sell-off."

European stocks were poised for a weekly loss of almost 3%, their biggest loss in four weeks. A close of 3.5% on the week would be the biggest decline this year.

OIL NOT SO SLICK

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.1%, ending the week down 2.7%, its biggest weekly loss since early July.

Japan's Nikkei stock index fell 0.36%, and was down about 1% for the week.

The People's Bank of China set its midpoint yuan rate at 6.3975 per dollar before the market opened, firmer than the previous day's close of 6.3990. The yuan also strengthened in spot market trading, changing hands at 6.3905 late in the Asian session.

But over the week, the yuan lost nearly 3% after the central bank's devaluation on Tuesday and pledge to allow market forces to play a greater role in setting the exchange rate.

"We just need to see if the yuan is going to stay halfway stable over the next few days, then confidence is going to come back," said Markus Huber, senior equity sales trader at Peregrine & Black. "If China calms down, we're going to have the potential for a rate hike in the US on the table again, and that could be the next drag on markets."

The dollar was largely steady against its main rivals on Friday. It was unchanged against the yen at 124.32 yen, off its two-month high of 125.28 on Tuesday. The euro was little changed at $1.1140, after rising 1.5% this week.

The dollar came under pressure this week as China's devaluation curbed expectations the Federal Reserve's long-awaited interest rate increase would come as early as its Sept. 16-17 meeting. But strong US retail sales data on Thursday backed the view that the Fed was ready to hike.

The yield on 10-year US Treasury notes was steady on the day - and the week - at 2.18%, having fallen to a near four-month low of 2.04% on Wednesday.

In commodities trading, crude oil futures extended sharp losses that pushed oil prices to levels not seen since early 2009, when the financial crisis was wreaking havoc on markets.

US crude rose to a new 6 1/2-year low of $41.35 a barrel, as a big increase in US stockpiles intensified worries over a growing global glut. It was last down 0.8% at $41.90 a barrel. Brent fell 0.5% to $48.96.

Gold was flat on the day but up 2% on the week, its best weekly performance in three months.