Volkswacht Bodensee - Equities waver on US recession warning, inflation slowdown

US inflation slowed sharply in March to five percent, data showed Wednesday, but minutes from the Federal Reserve's most recent policy meeting indicated officials foresaw a recession at the end of the year.

"Investors are weighing up an improving picture for US inflation... versus fears of a recession stateside," said Victoria Scholar, head of investment at trading firm Interactive Investor.

"US central bank policymakers are concerned about the negative economic fallout from the recent turmoil in the banking sector."

London stocks flatlined Thursday as data showed the UK economy unexpectedly stalled in February.

UK supermarket giant Tesco topped the risers, gaining 2.4 percent as news of a share buyback eclipsed news that net profits halved at Britain's biggest retailer last year on soaring inflation.

In the eurozone, Frankfurt stocks drifted lower but Paris jumped 0.9 percent to strike a fresh record-high.

Shares in French luxury giant LVMH leapt 4.1 percent after the maker of champagne and expensive fashion logged an "excellent" first quarter after the close of trading Wednesday.

In the US, the inflation reading was the lowest since May 2021, sparking hope that the Fed could soon end its policy of aggressive interest rate hikes.

Traders were awaiting the release of US wholesale inflation later Thursday.

That will be followed by crucial first-quarter earnings on Friday from top banks including JPMorgan and Citibank.

"For weeks it's all about the trajectory of inflation and subsequent interest rate hikes for investors," noted Nigel Green, head of financial consultancy deVere Group.

"But the focus is now shifting to earnings season.

"The big banks will be keenly watched as not only do they often set the mood music for the rest of the season, but also because they are more intricately linked to the rest of the economy than most other sectors," Green added.

Wall Street turned negative Wednesday after the Fed minutes, that highlighted fears over the impact of last month's banking crisis in which three US lenders went bust and Credit Suisse was taken over.

Asian markets ended mixed Thursday after a downbeat start.

Hong Kong edged up despite sharp losses in the tech sector that came after the Financial Times reported that Japan's SoftBank was looking to unload a majority of its holdings in Alibaba.

News that Chinese exports soared for the first time in six months, by a forecast-busting 14.8 percent, was unable to provide much lift to sentiment.

Oil prices dipped but held most of Wednesday's two-percent rally fuelled by a drop in US inventories and supply issues from Iraqi Kurdistan.

The two main contracts are now sitting around levels not seen since November, while traders are awaiting an outlook from crude exporters' cartel OPEC.

- Key figures around 1045 GMT -

London - FTSE 100: FLAT at 7,826.01 points

Paris - CAC 40: UP 0.9 percent at 7,460.69

Frankfurt - DAX: DOWN 0.1 percent at 15,688.27

EURO STOXX 50: UP 0.2 percent at 4,342.68

Tokyo - Nikkei 225: UP 0.3 percent at 28,156.97 (close)

Hong Kong - Hang Seng Index: UP 0.2 percent at 20,344.48 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,318.36 (close)

New York - Dow: DOWN 0.1 percent at 33,646.50 (close)

Euro/dollar: UP at $1.1018 from $1.0992 on Wednesday

Pound/dollar: UP at $1.2514 from $1.2485

Euro/pound: UP at 88.06 pence at 88.04 pence

Dollar/yen: UP at 133.21 yen from 133.13 yen

West Texas Intermediate: DOWN 0.2 percent at $83.09 per barrel

Brent North Sea crude: DOWN 0.3 percent at $87.06 per barrel

N.Fournier--BTB