European markets recover as Fed's Warsh backs AI investment

European markets attempted a recovery in the final trading session of the week, following renewed buying on Wall Street and in Asia, driven by comments from Federal Reserve official Kevin Warsh that AI investments significantly benefit the US economy. Investors scaled back bets on an interest rate hike after Warsh avoided endorsing tighter monetary policy despite higher-than-expected inflation data this week. Traders reduced the probability of a Fed rate increase by month-end to 15%, down from over 25% on Thursday, supporting gains in major European indices. In Milan, Brunello Cucinelli led gains after results, while Unicredit was in focus after ECB approval for its Commerzbank acquisition. The euro rose to $1.1232, oil prices fell but were set for weekly gains due to Middle East supply uncertainty, and the Italian-German bond yield spread narrowed to 106 basis points.