Wall Street pushed higher on Friday, following in the steps of the FTSE 100 ( ^FTSE ) and European stocks as a key measure of US inflation fell slightly more than expected. It comes as a sign that the US Federal Reserve will have room to keep cutting interest rates.

The personal consumption expenditures (PCE) index dropped from 2.5% to 2.2% in August, according to the Commerce Department, which was slightly lower than forecasts of 2.3%. However, the core measure, which excludes volatile items food and energy, ticked up to 2.7% last month.

Meanwhile, Chinese stocks enjoyed their best week since 2008 following a blitz of stimulus measures aimed at improving the faltering economy.

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China cut the amount banks must hold in reserve, releasing an estimated £106.6bn in liquidity into the financial market. Chinese markets are now closed for a week-long public holiday.

Mining shares jumped this week as hopes for increased demand from China lifted metal prices, with an index of London-listed industrial miners rising more than 11% this week. Similarly, gains in China-exposed luxury retailers lifted the personal goods index about 12%.

Tin Lu, chief China economist at Nomura, said: "Beijing seems finally determined to roll out its bazooka stimulus in rapid succession… Beijing’s recognition of the severe situation of the economy and lack of success in a piecemeal approach should be valued by markets.

"But eventually it is still necessary for Beijing to introduce well-thought policies to address many of the deep-rooted problems, particularly regarding how to stabilise the property sector, which is now in its fourth year of contraction."

Meanwhile, the Japanese yen fell by 1% to three-week lows amid a leadership contest in the country.

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