A look at the day ahead in European and global markets from

Stella Qiu.

No one could have guessed how this turbulent week in the

markets would end, but remarkably it's only taken one weekly

U.S. jobless claims report to undo most of the damage after

fears of a looming U.S. recession had sent investors into panic.

On Friday, Asia's share markets rallied across the board,

tracking a strong rebound on Wall Street. Japan's Nikkei gained

1.6% and has erased most of Monday's 13% loss, for a likely

weekly drop of just 1.5%.

As it stands now, the yen is set to finish down about 0.5%

against the dollar this week, after surging to a seven-month

peak on Monday that spurred the unravelling of yen carry trades,

a driving force in the recent global market rout.

The carry trade is far from dead, though, with JPMorgan

estimating this popular trade had reached perhaps $4 trillion.

Even the much-feared China slowdown story is turning around

a bit. Consumer inflation data on Friday showed prices rose by

more than expected in July, following trade data on Wednesday

that showed a surprising pick-up in import growth. This

suggested there is less risk of the world's second-largest

economy sliding into outright deflation.

All of that should make for a stronger open for Europe, with

no major economic data releases, earnings announcements or Fed

speakers on the agenda for Friday. Both EUROSTOXX 50 futures and

FTSE futures added 0.3%. A decent day would help the FTSE to

reverse its weekly losses and the DAX to build on its gains.

With money matters less of a headache, investors can perhaps

turn one eye to the climactic final days of the world's biggest

sporting event, as the Olympic Games in Paris head to their

conclusion on Sunday.

Host country France is now ranked fourth in the gold medal

tally, after the U.S., China and Australia. And it has good

chances at winning in basketball, volleyball and men's boxing.

Key developments that could influence markets on Friday:

-- CFTC commitment of traders positioning data, which will

indicate how many yen shorts have come out of the market

-- Germany final CPI data

-- France ILO unemployment rate for Q2