World stock markets close mixed

Analysts are still concerned over interest rate increases

Global stock markets were mixed by Friday's close, as earlier signs of a general recovery were put into question by renewed interest rate fears.

European and US stocks closed lower, while Asian stocks saw gains.

The FTSE 100 fell 0.39%, Frankfurt's Dax shed 0.85%, France's Cac 40 lost 0.63% and the Dow Jones lost 0.1%. However Japan's Nikkei added 2.82%.

Also fuelling the fall was news that China would up its reserve requirement, which could dampen economic growth.

Inflation fears

Earlier in the day the markets had shown signs of recovery following comments on Thursday from Federal Reserve chairman Ben Bernanke which had eased worries over rising inflation and a cooling world economy.

High oil prices would cause problems but the impact would be limited, he had said.

However, by later trading Friday there was renewed talk among analysts of interest rate fears.

"Everyone is still concerned about what the Fed is going to do and inflation continues to be the hot topic," said Edward Bretschger at First Albany Corp.

The Dow Jones drop came after it had risen 1.8% earlier.

Similarly, European falls came after the UK's FTSE 100 had risen 1.1%, France's Cac 40 rose 1.2% and Germany's Dax climbed 1.1%.

While some analysts say recent volatility is set to continue they also say it marks a readjustment rather than a new trend.

Economic slow-down

Global markets have been under pressure recently as investors worry that quicker inflation would mean higher interest rates and slower economic growth.

The fear has been that increased borrowing costs would see consumers and companies rein in spending.

While the main driver of price growth has been record oil prices, Mr Bernanke said late Thursday that their impact would diminish over time and the US economy would adjust.

Previously Mr Bernanke had said that the Federal Reserve was concerned about the pace of inflation, prompting investors to worry that the current round of rate hikes may not be over.

In May, the Fed raised interest rates for the 16th consecutive time to a five-year high of 5%, and some analysts were predicting that another increase was due in coming months.