Volkswacht Bodensee - European stocks climb as focus switches to Bank of England

With UK annual inflation stuck above 10 percent, the BoE is widely forecast to hike borrowing costs once more -- by a quarter-point to 4.5 percent in a decision due at 1100 GMT.

"UK inflation remains stubbornly high," noted Victoria Scholar, head of investment at Interactive Investor.

This is "at odds with the US and Europe which have seen their inflation rates start to come down".

Official data on Wednesday showed US inflation had dipped further but only marginally, suggesting the Federal Reserve still had much to do in its battle against rising prices.

Adding to the uncertainty was the battle to raise the US debt ceiling to avert a destabilising default, with Democrats and Republicans unable to reach a deal just weeks before the country runs out of cash to pay its bills.

The US consumer price index reading was the lowest in two years and a tad below what was expected, giving the Fed a little room to take a break in its long-running rate hike campaign.

However, the figure came after last week's stronger than expected print on US jobs creation that showed the world's top economy remained strong, while observers said further evidence was needed to show that rate hikes were bearing fruit.

The 4.9-percent inflation rise in April was far above the Fed's stated goal of two percent, which some analysts said meant it was unlikely officials would consider cutting rates at the end of the year, as some investors had been betting on.

This helped to support the dollar against major rivals Thursday.

"We need more... prints to clarify that inflation is definitely declining," said Priya Misra at TD Securities.

Still, Wall Street largely cheered the latest data, with the S&P 500 and Nasdaq rallying on Wednesday, helped by a bump in rate-sensitive tech giants.

- Key figures around 1000 GMT -

London - FTSE 100: UP 0.1 percent at 7,747.91 points

Frankfurt - DAX: UP 0.2 percent at 15,928.79

Paris - CAC 40: UP 0.6 percent at 7,408.49

EURO STOXX 50: UP 0.5 percent at 4,329.14

Tokyo - Nikkei 225: FLAT at 29,126.72 (close)

Hong Kong - Hang Seng Index: DOWN 0.1 percent at 19,743.79 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,309.55 (close)

New York - Dow: DOWN 0.1 percent at 33,531.33 (close)

Euro/dollar: DOWN at $1.0929 from $1.0985 on Wednesday

Pound/dollar: DOWN at $1.2587 from $1.2627

Dollar/yen: UP at 134.71 yen from 134.34 yen

Euro/pound: DOWN at 86.84 pence from 86.98 pence

Brent North Sea crude: UP 0.9 percent at $77.08 per barrel

West Texas Intermediate: UP 1.0 percent at $73.31 per barrel

O.Krause--BTB