Volkswacht Bodensee - European stocks rise before key US inflation data

Expectations are for the US central bank to hold fire at the end of its meeting Wednesday -- after 10 straight hikes to combat elevated inflation.

But there is a chance it could hike again should Tuesday's consumer prices number weaken less than expected.

"If we don't see a slowdown in core (inflation) prices, then that might introduce some nervousness that might prompt the Fed to hike again tomorrow instead of the pause that is currently being priced," noted Michael Hewson, chief market analyst at CMC Markets.

Core inflation strips out contributions from energy and food -- the two sectors mainly responsible for consumer prices indices rocketing worldwide over the past year.

The Fed decision comes as central banks around the world continue to struggle in their battle against inflation, which remains well above their two percent targets.

The European Central Bank is expected to unveil another increase Thursday despite the eurozone dipping into recession, while the Bank of Japan is tipped to stand pat when it meets Friday.

Canada and Australia announced increases last week.

Official data Tuesday showing record UK wage growth, despite lagging the country's inflation rate, increased the chances of another rate hike from the Bank of England next week and possibly more thereafter, analysts said.

China's central bank, however, announced a small cut in its short-term lending rates as authorities try to kickstart a recovery in the economy, which has run out of steam after an initial burst following the lifting of zero-Covid restrictions.

Tuesday's move comes after figures showed inflation remained subdued and saw the yuan drop against the dollar, though the currency pared the losses on reports that fresh stimulus measures were being discussed.

The cut reveals "growing concerns among policymakers about the health of China's recovery", said Capital Economics economist Julian Evans-Pritchard.

China's problems have weighed on the crude market, even after Saudi Arabia's surprise decision to slash output by a million barrels a day next month.

Oil futures jumped Tuesday but made only some headway into the four percent losses suffered a day earlier when Goldman Sachs slashed its price forecast for the third time in six months.

- Key figures around 1045 GMT -

London - FTSE 100: DOWN 0.1 percent at 7,565.56 points

Frankfurt - DAX: UP 0.2 percent at 16,130.88

Paris - CAC 40: UP 0.1 percent at 7,254.30

EURO STOXX 50: UP 0.2 percent at 4,324.85

Tokyo - Nikkei 225: UP 1.8 percent at 33,018.65 (close)

Hong Kong - Hang Seng Index: UP 0.6 percent at 19,521.42 (close)

Shanghai - Composite: UP 0.2 percent at 3,233.67 (close)

New York - Dow: UP 0.6 percent at 34,066.33 (close)

Euro/dollar: UP at $1.0798 from $1.0762 on Monday

Pound/dollar: UP at $1.2564 from $1.2510

Dollar/yen: FLAT at 139.55 yen

Euro/pound: DOWN at 85.92 percent from 86.00 pence

Brent North Sea crude: UP 2.1 percent at $73.38 per barrel

West Texas Intermediate: UP 1.8 percent at $68.35 per barrel

C.Meier--BTB