Stocks end on soft note after choppy week Friday 21:15. World stock markets adopted a moderately softer tone at the end of a week characterised by choppy, holiday-thinned trading. The FTSE All-World equity index slipped 0.1 per cent on Friday, even as the S&P 500 recovered from an early decline to close 0.1 per cent higher, leaving it flat for the five-day period. The S&P touched record highs at the start of the week, but then saw its upward momentum falter in the face of a mixed batch of US earnings reports . A Federal Reserve policy meeting and some important US economic figures next week also made for a cautious mood among participants. In Europe, the FTSE Eurofirst 300 index fell 0.3 per cent on Friday for a weekly drop of 0.3 per cent. Tokyo was the biggest casualty among the major markets as the Nikkei 225 tumbled 3 per cent on Friday to a three-week low, leaving it nursing a five-day drop of 3.2 per cent. Uncertainty about the outlook for Chinese growth was a dominant feature this week, as a disappointing survey of manufacturing activity in the country contrasted sharply with further signs of economic improvement in the US and Europe. "Amid growing signs that the Chinese economy is slowing more than most market participants had initially anticipated - and as growth and trade in emerging market countries seems to be weakening somewhat - our scenario of a rebound in activity in both the US and Europe is gaining traction, whereas Japan is still leading the race," said Philippe Gudin at Barclays. This new balance of growth at the global level will probably complicate central bank action and communication in the coming months. Indeed, the generally cautious tone to trading this week was also a reflection of investors" continued sensitivity to developments regarding the prospects for US monetary policy. Most market participants expect the Federal Reserve to begin scaling back, or "tapering," its quantitative easing programme in September. But there was a growing acceptance that any rise in interest rates was still a long way off, particularly given recent emphasis by Ben Bernanke, Fed chairman, that policy moves remained data-dependent. Indeed, reports this week suggested the Fed could strengthen its forward rate guidance, lowering the unemployment target and adding a lower-bound inflation threshold. "Such a shift in guidance would prompt the markets to push out Fed rate hike expectations, possibly into 2016, and further heighten market sensitivity to downside data surprises," said Hans Redeker, head of FX strategy at Morgan Stanley. The yield on the 10-year US government bond eased 1 basis point on Friday to 2.56 per cent, leaving it 7 basis points higher over the week. "US Treasury yields are 100bp higher than they were in early May which, to me, signals that the market has now priced in tapering," said Chis Iggo, chief investment officer, fixed income at Axa Investment Managers. "With Mr Bernanke going all out to persuade us that actual monetary tightening is a long way off and that tapering will take place in a very orderly manner, we are very much back in a "risk-on" environment." The 10-year Bund yield, meanwhile, was flat on the day but up 14bp on the week at 1.67 per cent. The eurozone's "flash" composite purchasing managers" index suggested that the region had pushed back into growth territory this month for the first time since the start of 2012. The figures helped reinforce the view that the European Central Bank would leave interest rates unchanged when it meets next week. "We do not expect any change in monetary policy at the next ECB meeting," said Laurence Boone at BofA-Merrill Lynch. However, persistently weak credit growth, slipping inflation expectations, and the ongoing liquidity drain all raise the risks of rate cuts in coming months. That provided support for the euro, with the single currency climbing more than 1 per cent against the dollar over the week to within sight of $1.33. Indeed, the dollar staged a broad retreat this week, slipping back below the Y100 level and falling to its lowest for a month against a basket of currencies. The softer tone of the dollar helped gold rally $36 over the week to $1,332 an ounce, although it eased $1 on Friday. But industrial commodities failed to benefit much as investors focused mainly on the uncertain outlook for Chinese demand. Copper spent much of the week stuck below the $7,000 a tonne mark in London, although it spiked to a one-month high of $7,119 on Wednesday as more robust data in the eurozone and US offset China concerns. Brent oil settled at $107.17 a barrel, down 48 cents on the day and 90 cents on the week.