European shares inched up in early trade on Friday as gains in mining stocks offset weaker retail shares, while markets eyed key U.S. inflation data later in the day for clues on interest rates, Reuters reported. Bang & Olufsen slid around 20 percent after the Danish luxury stereo and television maker downgraded its 2007/08 full-year expectations, blaming a difficult market. By 0922 GMT, the pan-European FTSEurofirst 300 index was up 0.4 percent at 1,272.75 points, dipping in and out of negative territory and looking for direction after closing 1.3 percent lower in the previous session. U.S. markets rallied overnight on comments from credit ratings agency Standard & Poor's that an end to subprime-related writedowns was in sight. But investors' euphoria faded as the dollar hit a record low against the euro and fell back towards a 12-year low versus the yen, sending shares in Asia lower. "We can't quite join in on U.S. markets' confidence," Susanne Lahmann, strategist at German regional bank Bremer Landesbank said. "There is still a lot of scepticism in the market here about whether that all those measures to calm down markets will actually work and lead to a change in the trend." She said she expected no great moves in markets today, as the focus was shifting to next week, the U.S. Federal Reserve interest rate decision on Tuesday in particular. With this in mind, markets will scrutinise inflation data due at 1230 GMT and comments from U.S. Federal Reserve Chairman Ben Bernanke, who is due to make a speech at 1700 GMT. German bank Helaba said in a note: "If Fed chairman Bernanke makes no attempt to dampen rate cut speculation for next Tuesday's FOMC meeting during his speech in Washington, a reduction in the Fed funds rate by 75 basis points to 2.25 percent will be likely." "Even the critical inflation setting should do little to alter this situation, as Bernanke recently indicated that he will give priority to protecting the U.S. economy from downside risks," Helaba said. The gold price jumped on Friday and held within sight of the $1,000-an-ounce barrier broken on the futures market after the dollar hit a record low against the euro, boosting the metal's appeal as an alternative investment. Oil fell as investors took profits after crude hit a record $111 and oil majors such as BP, Total and Royal Dutch Shell eased. Retailers were among the weakest trading stocks in Europe after a bearish note from Goldman Sachs. Tesco fell 1.5 percent and Wm Morrison slipped 3 percent.
