Volkswacht Bodensee - European equities extend gains on inflation slowdown

The dollar climbed before US inflation figures that should show how much impact the Federal Reserve's aggressive interest rate hikes are having in taming prices in the world's biggest economy.

The eurozone's annual inflation rate slowed sharply to 6.9 percent in March from 8.5 percent in February, beating expectations as energy prices eased, the EU's statistics agency said.

Inflation still remains well above the two-percent level targeted by the European Central Bank (ECB), despite falling from a peak of 10.6 percent in October.

London stocks were boosted by upgraded data showing that the UK economy grew 0.1 percent in the fourth quarter of last year to narrowly avoid recession. An initial reading had output flat in the final three months of last year.

The Bank of England and ECB have raised interest rates repeatedly to tame red-hot inflation but the size of the next hikes are unclear after recent turbulence in the commercial banking industry.

The eurozone data also showed eurozone core inflation, a key indicator that strips out volatile food and energy, edged up to 5.7 percent.

"Headline inflation is coming down sharpish due to energy base effects -- but core is rising and showing an extremely sticky tendency which is the real worry," noted Finalto analyst Neil Wilson.

In Asia, stock markets built on gains as banking-sector worries faded and traders grew optimistic that central banks could be near the end of their rate-hiking cycle.

With the financial turmoil of recent weeks subsiding, traders are refocusing on the battle against inflation, though expectations for how high borrowing costs will go have lowered.

The Fed had been tipped to push rates well above five percent by the end of the year, but with credit seen narrowing in light of the latest upheaval, forecasts are for them to finish just above four percent.

That has helped push up global equities, which had been under pressure through February and March.

Hong Kong stocks were boosted also by a rally in tech firms after it emerged that e-commerce giant Alibaba's logistics arm was preparing for a listing in the city.

News of the IPO by Cainiao Network Technology came after Alibaba said it intended to split into six units and go public.

Factory and services activity data suggesting that China's powerhouse economy continued to improve also lifted confidence.

- Key figures around 1030 GMT -

London - FTSE 100: UP 0.2 percent at 7,636.86 points

Frankfurt - DAX: UP 0.4 percent at 15,579.38

Paris - CAC 40: UP 0.5 percent at 7,298.28

EURO STOXX 50: UP 0.4 percent at 4,301.26

Tokyo - Nikkei 225: UP 0.9 percent at 28,041.48 (close)

Hong Kong - Hang Seng Index: UP 0.5 percent at 20,400.11 (close)

Shanghai - Composite: UP 0.4 percent at 3,272.86 (close)

New York - Dow: UP 0.4 percent at 32,859.03 (close)

Euro/dollar: DOWN at $1.0892 from $1.0905 on Thursday

Pound/dollar: DOWN at $1.2381 from $1.2386

Euro/pound: DOWN at 87.93 pence from 88.04 pence

Dollar/yen: UP at 133.40 yen from 132.70 yen

Brent North Sea crude: FLAT at $79.25 per barrel

West Texas Intermediate: UP 0.4 percent at $74.63 per barrel

burs-rfj/bcp/lth

C.Meier--BTB