Volkswacht Bodensee - Stock markets diverge as traders react to inflation numbers

The dollar jumped on expectations of more rises to US interest rates as the pace of price rises in the world's biggest economy was less than hoped.

Analysts said the bigger-than-expected drop in UK inflation could see the Bank of England pause its rate-tightening cycle.

"After a US inflation number which proved a mild disappointment to the market..., the UK's own inflation reading came in lower than expected," noted AJ Bell investment director Russ Mould.

The much-anticipated US inflation update Tuesday showed a slight slowdown in January from the previous month -- but the 6.4-percent reading was higher than forecast.

On Wednesday, official data showed UK annual inflation has eased to 10.1 percent last month from 10.5 percent to December.

Central banks have massively hiked interest rates over the past year in a bid to cool decades-high inflation.

"Investors are trying to work out how the US Federal Reserve might react as they desperately look towards the milestone of the final rate hike in this cycle," said Mould.

"For now, markets are retaining some confidence that this pivot isn't too far away."

Focus now turns to the release of US retail sales figures on Wednesday.

Wall Street ended mixed Tuesday, having fluctuated after the data release.

In Asia Wednesday, Hong Kong led losses with a drop of 1.4 percent -- the recent boost from China's reopening from zero-Covid running out of steam.

London just about stayed in positive territory, despite a 10-percent plunge in the share price of Barclays bank.

Barclays missed its earnings target in the final quarter of last year after heavily increasing provisions for loans it expects to turn sour on fallout from high inflation.

Elsewhere, Dutch brewer Heineken on Wednesday reported a jump in 2022 sales after it passed increased costs onto consumers -- but its net profit fell.

- Key figures around 1200 GMT -

London - FTSE 100: UP 0.1 percent at 7,958.81 points

Frankfurt - DAX: UP 0.4 percent at 15,448.26

Paris - CAC 40: UP 1.1 percent at 7,294.21

EURO STOXX 50: UP 0.7 percent at 4,268.28

Tokyo - Nikkei 225: DOWN 0.4 percent at 27,501.86 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 20,812.17 (close)

Shanghai - Composite: DOWN 0.4 percent at 3,280.49 (close)

New York - Dow: DOWN 0.5 percent at 34,089.27 (close)

Euro/dollar: DOWN at $1.0716 from $1.0739 on Tuesday

Pound/dollar: DOWN at $1.2060 from $1.2176

Euro/pound: UP at 88.85 pence from 88.17 pence

Dollar/yen: UP at 133.46 yen from 133.07 yen

West Texas Intermediate: DOWN 0.9 percent at $78.35 per barrel

Brent North Sea crude: DOWN 0.7 percent at $84.97 per barrel

D.Schneider--BTB