The new month kicks off with Japan's Nikkei Average recording a fresh high, on the heels of the S&P 500 and Nasdaq closing at record highs on Thursday, buoyed by tech stocks linked to AI.

Heavyweight chipmaker Nvidia was one of the biggest boosts to the benchmark indexes while smaller rival Advanced Micro Devices also surged.

Stock markets are in a fairly buoyant mood after in-line U.S. inflation figures on Thursday helped shape expectations for the timing of Fed interest rate cuts, and not only extended the global equity rally but also pushed U.S. Treasury yields lower.

The German DAX also hit a fresh all-time high on Thursday, and Europe opens today in anticipation of euro zone flash February PMI numbers that should show euro area inflation, which soared to double-digits in 2022, is moving back towards its 2% target.

That's becoming more certain after data this week showed inflation dipped to 2.7% from 3.1% in Germany, to 3.1% from 3.4% in France, and to 2.9% from 3.5% in Spain, with falls driven primarily by energy and food prices.

The European Central Bank has kept interest rates at record highs since September. It meets on March 7 and, while no policy change is expected, the bank is likely to acknowledge the improved inflation outlook, which will eventually open the door to rate cuts. A Reuters poll shows the ECB will first cut interest rates in June.

Most members of the ECB Governing Council, including President Christine Lagarde, are aligned with the view that more data, especially on the labour market, will be required before cutting the deposit rate from a record high 4.00%.

Last week, Lagarde said negotiated wage data from Q1, due in May, will be especially important for the ECB. That makes June the most likely month to consider a first rate cut, an expectation shared by markets and economists.

Key developments that could influence markets on Friday:

Data: Euro zone PMIs, euro zone CPI, Italy unemployment rate, U.S. Feb ISM manufacturing index, UK house prices

Speakers: Fed Atlanta President Raphael Bostic; Fed Board Governor Adriana Kugler

Earnings: Daimler Truck Holding, Pearson PLC , Aegon Ltd, Rightmove PLC, Vallourec SA, Virgin Money UK

Govt debt auctions: UK - reopening of 1-month, 3-month and 6-month debt auctions; Germany - reopening of 7-year and 13-year debt auctions

(By Vidya Ranganathan; Editing by Christopher Cushing)