Spreadbetters expected Britain's FTSE (.FTSE), Germany's DAX (.GDAXI) and France's CAC (.FCHI) to tip toe higher while the markets awaited fresh cues from the Middle East. Crude oil prices were lower due to the dollar's bounce and as investors reassessed the potential impact of the escalating conflict in Yemen, where Saudi Arabia and allies carried out air strikes on Iranian-backed Houthi rebels on Thursday. Excluding the effect of last year's sales tax increase, data released on Friday showed Japan's core consumer price index was flat in February compared with a year ago. U.S. crude (CLc1) was down 2.1 percent at $50.33 a barrel after jumping 4.5 percent overnight because of the military action in Yemen.
Oil prices fell more than $1 on Friday, after sharp gains in the prior session, as worries of a disruption to supplies due to Saudi Arabia-led air strikes in Yemen eased. Goldman Sachs said the strikes in Yemen would have little effect on oil supplies as the country was only a small crude exporter and tankers could avoid passing its waters to reach their ports of destination. Oil jumped around 5 percent on Thursday, the biggest daily gain in a month, as air strikes in Yemen by Saudi Arabia and its Gulf Arab allies sparked fears that escalation of the Middle East battle could disrupt world crude supplies. The Saudi-led coalition launched more air strikes on Friday against targets in the Houthi-controled Yemeni capital of Sanaa including close to the presidential compound.
The Senate passed a Republican-authored budget plan early on Friday that seeks $5.1 trillion in domestic spending cuts over 10 years while boosting military funding. The 52-46 vote on the non-binding budget resolution put Congress on a path to complete its first full budget in six years. It came at the end of a marathon 18-hour session that saw approval of dozens of amendments ranging from Iran sanctions to carbon emissions and immigration policies. Two Republican senators who are running or considering running for president, Ted Cruz and Rand Paul, voted against their party's budget plan, which is similar to one passed by House Republicans on Wednesday.