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LONDON   - Stocks extended their gains on Friday after Russian President Vladimir Putin said there had been some progress in Moscow's talks with Ukraine, although the rally was not enough to stop shares heading for their fifth consecutive weekly loss.

Putin did not provide any details and recent talks between the two countries have not made much headway.

The war in Ukraine, now in its third week, and the prospect of central banks tightening monetary policy to tame inflation just as the global economy begins to slow has sent financial markets on a rollercoaster ride with wild swings up and -- mostly down.

Data on Thursday showed U.S. inflation at a four-decade high, prompting traders to raise their bets on rate hikes from the Federal Reserve beginning next week and sparking a selloff on Thursday.

The Bank of England is expected to tighten next week, especially after January's economic growth numbers came in stronger than expected on Friday. A more hawkish than expected European Central Bank this week added to the sense policymakers will not be deterred by the uncertainty wrought by the war in Ukraine and will tighten.

But after another bruising week and with commodity prices down from recent highs, traders looked for reasons to buy back into riskier assets including stocks.

"Overall, central banks now have less flexibility to cushion shocks to equity markets, as they have succeeded in doing over recent years," said Mark Haefele, Chief Investment Officer Global Wealth Management at UBS.

But he said simply selling out of stocks was not advisable.

"Our view remains that simply selling risk assets is not the best response to the war in Ukraine," he said, advising investors to reduce equity exposure.

A late rebound in Asia also helped the mood. After slumping early in the day on regulatory worries, Hong Kong's equity market partly recovered as a source told Reuters consultation between Chinese and U.S. regulators on audit and regulatory cooperation was moving "relatively smoothly".

By 1215 GMT, the Euro STOXX was up 2.18% while Germany's DAX gained 2.96% and Britain's FTSE 1.75%.

Wall Street futures extended their gains ahead of the U.S. open.

MSCI's broadest index of Asia-Pacific shares outside Japan closed down 1.2% after Thursday's drop on Wall Streer spilled into the Asian session.

Despite Friday's rebound, sentiment remains weak across markets.

Western allies on Friday look set to revoke Russia's "most favoured nation" status over its invasion of Ukraine. That would further ratchet up pressure on an economy that is already heading into what the IMF predicting as a "deep recession."

The MSCI World index for the week is down 1.1% -- on track for its fifth weekly decline. The last time it fell five weeks in a row was in early 2018.

EURO BACK ABOVE $1.10

The euro recovered in line with the more buoyant mood on stocks and was last up 0.3% at $1.1025. The more hawkish tone from the ECB had failed to boost momentum for the single currency substantially as investors continued to fret about the impact of the war in Ukraine on the euro zone economy. [FRX/]

"On another day - i.e. pre-war - EUR/USD might have enjoyed lasting gains on ECB hawkishness," said Chris Turner, Global Head of Markets at ING.

"Yet it looks unlikely that an ECB, barely matching (U.S. Federal Reserve) tightening, can generate a stronger euro in the face of heavy terms of trade losses."

The yen eased to its weakest level against the dollar since January 2017, hitting as low as 117.06 per dollar.

The dollar index gave up early gains and was last unchanged on the day at 98.377, below a more than 1-1/2 year high of 99.418 hit on Monday.

In commodity markets, oil prices rose but were way off the multi-year highs reached earlier in the week. U.S. crude increased 1.63% to $107.75 a barrel. Brent crude was 1.72% higher at $111.21 per barrel.

Gold spot prices declined 1.3% to $1,969 per ounce, after traded as high as $2,070 on Tuesday. [GOL/]