Volkswacht Bodensee - Europe stocks advance, London hits new record

London's FTSE 100 index forged an all-time peak at 8,364.04 points on the eve of a monetary policy decision from the Bank of England, which is forecast to hold rates but could flag a summer reduction.

Frankfurt and Paris stocks also pushed higher, shrugging off Asian losses and lacklustre Wall Street, boosted by speculation that the European Central Bank could also decide to cut rates soon.

- Optimism -

"European stocks are rising on optimism that borrowing costs will soon be lowered," City Index analyst Fiona Cincotta told AFP, noting that Frankfurt's DAX was also near its record.

"The BoE is expected to leave rates unchanged but could start to pave the way for a rate cut in the coming months."

The prospect of lower interest rates tends to boost stock markets because it cuts borrowing costs for individuals and businesses, thereby lifting both consumer spending and investment.

"A lower interest rate environment is good news for households and businesses alike," concluded Cincotta.

However, on the downside, major Asian markets fell on Wednesday as dealers paused for breath, with Hong Kong falling for a second straight day after a 10-day winning streak.

Wall Street ran tepid on Tuesday after surging in reaction to Friday's below-forecast US jobs data, which ramped up bets on a Federal Reserve interest rate cut.

With the next major economic release on inflation not until next week, and many big-ticket earnings releases out of the way, investors are keeping tabs on comments from central bankers, hoping for an idea about their plans.

"There was limited data on corporate earnings to worry the markets, with no unexpected surprises and a lack of major US economic data in the days ahead," said Kyle Rodda at Capital.com.

"Debate continues within markets and among policymakers about the appropriate level for interest rates."

Many US policymakers have spent the year pushing back against market expectations for how many cuts will be enacted this year as inflation comes down.

The latest, Minneapolis Fed boss Neel Kashkari, said he thought US borrowing costs would likely stay higher for some time so that officials could be sure prices were being brought under control and get inflation back to the two percent target.

- Key figures around 1100 GMT -

London - FTSE 100: UP 0.6 percent at 8,359.34 points

Paris - CAC 40: UP 0.9 percent at 8,146.41

Frankfurt - DAX: UP 0.5 percent at 18,520.42

EURO STOXX 50: UP 0.5 percent at 5,041.73

Tokyo - Nikkei 225: DOWN 1.6 percent at 38,202.37 (close)

Hong Kong - Hang Seng Index: DOWN 0.9 percent at 18,313.86 (close)

Shanghai - Composite: DOWN 0.6 percent at 3,128.48 (close)

New York - Dow: UP 0.1 percent at 38,884.26 (close)

Euro/dollar: DOWN at $1.0747 from $1.0772 on Tuesday

Pound/dollar: DOWN at $1.2486 from $1.2564

Dollar/yen: UP at 155.32 yen from 153.86 yen

Euro/pound: UP at 86.07 from 85.72 pence

West Texas Intermediate: DOWN 1.7 percent at $77.04 per barrel

Brent North Sea Crude: DOWN 1.5 percent at $81.95 per barrel

R.Flueckiger--VB