Janet Yellen and Mario Draghi Warn Against Regulatory Cuts, Trade Moves

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Speeches Friday by Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi may offer clues on the timing of stimulus reduction.

The stability of the current system guards against a repeat, she said, while outside analysts have noted that it could also free central bankers to leave interest rates lower instead of worrying about the impact of those low rates on financial markets.

"We expect the European Central Bank to at least present a game plan at the September meeting, probably enriched by a clear message that the relevant committees have been tasked to investigate options for tapering", the ING note said. The world's largest economy faces a late-September deadline to raise the its debt ceiling or risk defaulting on debt payments.

On the US economic front, the Labor Department released a report showing a modest uptick in initial jobless claims in the week ended August 19th. The dollar slipped amid July data on USA home sales highlighted patchy US growth. The S&P 500 index advanced 4.08 points, or 0.2%, at 2,443.05, while the Nasdaq Composite Index finished lower, down 5.68 points, or less than 0.1%, at 6,265.64. Durable goods orders are scheduled for 8:30am and are expected to grow 0.4% ex-transportation.

The US dollar traded around the value of 109.57 yen for most of the day leading up to Yellen's speech.

Airline stocks saw notable weakness, however, extending a recent downward trend.

Extending early fall, the greenback fell to more than a 3-week low of 1.2503 against the loonie. In the year to July, it remained well short of that, at 1.3 percent. Arrowhead Pharmaceuticals (ARWR) led the way higher.

Asian stocks have been fairly quiet Friday, as traders await the Jackson Hole comments from the Fed's Yellen and ECB's Draghi.

IG's opening calls suggest that the Footsie will start the session 0.10 percent higher at 7,415 points.

The final revision of Germany's second-quarter growth figures confirmed the economy expanded 0.6% in the period, with household consumption the biggest contributor to putting the country on track for its strongest annual expansion since 2011. Usually, this would have enough weight to influence market activity to some extent, but the attention of investors is elsewhere.

Benchmark 10-year U.S. Treasury notes rose 5/32 in price, pushing the yield down to 2.1781 percent.

Dr Yellen addressed these criticisms head-on in her speech, saying the research is mixed but that Fed officials believe that there were "sizeable net benefits to economic growth from higher capital standards".

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