Volkswacht Bodensee - Falling inflation gives equities a boost

But oil prices slumped lower after OPEC and its Russia-led allies failed to address expected deeper production cuts as a weak global economy weighs on demand.

A key inflation measure used by the US Federal Reserve to set interest rates eased further last month amid a drop in energy prices, according to government data published on Thursday.

The annual personal consumption expenditures (PCE) price index rose 3.0 percent in October, down 0.4 percentage points from a month earlier, the Commerce Department announced in a statement.

The Fed pays most attention to the so-called core reading that strips out volatile food and energy prices, which slowed to 3.5 percent.

The release will provide welcome news for the Fed, which recently held its key lending rate at a 22-year high as it looks to return inflation firmly to the long-term target of two percent without triggering a damaging recession.

Cutting inflation while avoiding a downturn, commonly known as a "soft landing," is challenging to pull off, but policymakers at the US central bank have sounded increasingly optimistic they can succeed this time around.

Traders had already been predicting a US rate cut in the first half of next year and Thursday's reading should strengthen that sentiment.

Wall Street's main indices climbed at the opening bell, but the S&P 500 and Nasdaq couldn't hold onto gains as profit-taking set in.

"Having already rallied hard off the back of the CPI data a month ago, US stocks responded in muted fashion, but this November will go down as a very solid month for stocks on Wall Street," said Chris Beauchamp, chief market analyst at online trading platform IG.

But Callie Cox at eToro online brokerage urged caution.

"The economy is slowing, and a recession is still a risk," she said. "The market may overlook economic weakness, but smaller, speculative companies could be more vulnerable if anything breaks."

Meanwhile, data released on Thursday showed inflation in the eurozone has hit the lowest level in more than two years.

Consumer prices increased 2.4 percent in November across the 20-nation bloc that shares the euro, the lowest since July 2021.

The data will provide comfort to the European Central Bank, which has paused an unprecedented streak of interest rate hikes aimed at taming red-hot inflation.

The euro retreated against the dollar as the inflation reading raised expectations that the Frankfurt-based ECB could consider cutting rates soon.

"While policymakers have continued to push back against talk of rate cuts, the questions will be impossible to ignore now with markets pricing in one in April and at least four in total next year," said market analyst Craig Erlam at OANDA trading platform.

Separate data showed the economy of eurozone member France contracted slightly in the third quarter, adding to worries about a possible global recession next year.

Europe's main markets finished the day with gains.

- Key figures around 1630 GMT -

New York - Dow: UP 0.9 percent at 35,750.61 points

London - FTSE 100: UP 0.4 percent at 7,453.75 (close)

Paris - CAC 40: UP 0.6 percent at 7,310.77 (close)

Frankfurt - DAX: UP 0.3 percent at 16,215.43 (close)

EURO STOXX 50: UP 0.3 percent at 4,382.47 (close)

Tokyo - Nikkei 225: UP 0.5 percent at 33,486.89 (close)

Hong Kong - Hang Seng Index: UP 0.3 percent at 17,042.88 (close)

Shanghai - Composite: UP 0.3 percent at 3,029.67 (close)

West Texas Intermediate: DOWN 3.5 percent at $75.16 per barrel

Brent North Sea crude: DOWN 0.6 percent at $82.61 per barrel

Euro/dollar: DOWN at $1.0909 from $1.0978 on Wednesday.

Pound/dollar: DOWN at $1.2649 from $1.2698

Dollar/yen: UP at 147.82 yen from 147.22 yen

Euro/pound: UP at 86.26 pence from 86.43 pence

burs/rl/giv

F.Mueller--VB