Europe’s main stock markets rallied Friday as investors fished for bargain shares and shrugged off losses elsewhere. London stocks were lifted by official data showing UK retail sales rose 0.6 percent in October, rebounding from a 1.5-percent slump in September. The news boosted the pound which had fallen the previous day on a harsh government budget and confirmation Britain was in recession. London stocks gained 0.8 percent, while Frankfurt and Paris each jumped 1.1 percent in value. “There’s a strong argument that European markets look undervalued, and have suffered more this year, so there is still plenty of bargain hunting going on,” IG analyst Chris Beauchamp told AFP. “There appears to be hope that European inflation might cool early next year.” The pound rebounded after a sharp fall against the dollar Thursday. Asian equities experienced mixed fortunes on Friday as cautious investors tried to gauge the outlook for Federal Reserve monetary policy after several officials tempered optimism over signs that inflation is slowing in the world’s biggest economy. While the week has been broadly positive for global equities following softer-than-expected US consumer and wholesale price figures, a strong reading on retail sales and jobless claims showed plenty of resilience to higher interest rates. With that in mind, St Louis Fed President James Bullard warned more hikes were needed to bring inflation down from four-decade highs, adding that US interest rates might need to go as high as seven percent. That was followed by Minneapolis Fed boss Neel Kaskari saying he had not witnessed much evidence that underlying demand was cooling and did not want to forecast when the tightening would end. The comments came after a similar message from other policymakers, who have sought to calm markets, which soared in the wake of last Thursday’s consumer prices reading. They also fuelled fears among traders that the sharp rate-hiking campaign — including four bumper 0.75-point increases in a row — would tip the US economy into recession. “Investors seem continually surprised by the Fed merely repeating its mantra,” said Interactive Investor analyst Richard Hunter. “Rates are likely to continue rising… and may well stay higher until such time as a sustained slowdown in inflation is evident.”