Fresh signs of the resilience of the US economy offered support to global equity markets and the dollar this week, offsetting a rally for oil prices.

But investors remained concerned about the outlook outside the US and continued to display acute nervousness about the health of the financial system.

US second-quarter GDP growth was revised up sharply, largely because of strong exports, although analysts warned that the outlook for domestic consumption was more fragile – particularly given the fading impact of recent US tax rebates.

That view was underlined on Friday as data showed that personal spending growth in real terms fell 0.4 per cent in July.

“Overall, there are a lot of negatives for consumption right now and precious few positives,” said Paul Ashworth, senior US economist at Capital Economics.

“With consumption falling we suspect that the overall economy will contract too, even after allowing for the strength of exports.”

Meanwhile, data releases elsewhere heightened the sense of gloom about the global economic outlook. In Europe, the German Ifo business climate index fell to its lowest for three years in August while eurozone economic sentiment also continued to decline last month.

However, any hopes among investors for a cut in interest rates to stimulate growth appeared to be quashed by a welter of hawkish comments by European Central Bank officials.

These came in spite of data that some analysts believed signalled a peak in eurozone inflation.

“Inflation has started to slow, but remains too high for the ECB to soften its rhetoric,” said Marco Valli, economist at UniCredit, although he added: “With growth weakness bound to persist throughout next year, rate cuts should be delivered, starting from the end of the second quarter next year.

This week’s UK economic releases were consistently miserable and drove sterling to a 12-year low on a trade-weighted basis – even though analysts said a cut in interest rates remained unlikely before the end of the year.

And there was little for Japanese investors to cheer from a string of economic releases on Friday, even as the government announced a modest economic stimulus package. Michael Taylor at Lombard Street Research said the package would do little to boost growth.

“A major factor in the weak economy is the squeeze on corporate profits but especially consumer real incomes from externally generated inflation,” he said. “Friday’s inflation data underscored this as the national CPI rose to a 12-monthly rate of 2.3 per cent in July, a decade high.”

However, Japanese equities shrugged off the data and put in their best performance for three weeks. The Nikkei 225 Average rose 3.2 per cent over the week, but was still down 2.3 per cent over August as a whole, its third successive monthly decline.

European stocks also moved higher over the week as financials returned to favour. The FTSE Eurofirst 300 index gained 1.6 per cent and 1.2 per cent over the month – only its second monthly gain this year.

Wall Street lagged behind somewhat. The S&P 500 closed 0.7 per cent lower over the week but up 1.5 per cent over the month.

On the currency markets, the dollar touched a six-month high against the euro at the start of the week but subsequently drifted back as investors booked profits.

Analysts said the big question now was whether the US currency could extend the rally that began six weeks ago.

“Despite huge investor scepticism surrounding the dollar’s rally, we think it was supported by clear fundamental factors, was reasonable in magnitude and has more room to run,” said Jim McCormick, head of currency strategy at Lehman Brothers.

“That being said, the short-term factors that triggered it argue for a pause,” Mr McCormick said.

European government bonds see-sawed as investors weighed the chances of a cut in eurozone interest rates.

The yield on the rate-sensitive two-year Schatz bond settled 2 basis points lower at 4.12 per cent while the 10-year Bund yield fell 5bp to 4.17 per cent – although those moves masked sharp swings through the week.

At one point, the gap between the yield on the two maturities narrowed to the lowest for six weeks after Axel Weber, the president of the Bundesbank, said talk of eurozone interest rate cuts was “premature”.

In the US, the 10-year Treasury yield was up 3bp at 3.81 per cent and the two-year was 1 basis point higher at 2.37 per cent.

Oil provided the main impetus in commodities as worries about the potential impact of tropical storm Gustav on oil installations in the Gulf of Mexico lifted crude prices.

The price of October US light sweet crude rose 0.7 per cent over the week to $115.46 a barrel – having briefly topped $120. Gold rose 1.5 per cent.

Copyright The Financial Times Limited 2018. All rights reserved.

Comments have not been enabled for this article.