Volkswacht Bodensee - Stocks diverge as focus turns to US inflation data

After a painful collapse for equities a week ago, fuelled by a big miss on US jobs creation, equities have bounced back and ended Friday on a healthy note.

The gains were helped by a report showing fewer people than expected claimed US unemployment benefits, soothing fears that the world's top economy was contracting.

The recovery extended into the new week, while the dollar was mixed against main rivals.

"The stabilisation of sentiment is continuing, following the sell off a week ago, as concerns about an American recession ease off a little," noted Susannah Streeter, head of money and markets at Hargreaves Lansdown.

"The latest inflation data in the US will be in sharp focus this week."

The data could spark renewed volatility.

"It feels that any number that falls outside of expectation could be the catalyst for an outsized move, in either direction," said Trade Nation analyst David Morrison.

"It is worth considering that US Treasuries remain in demand, suggesting that investors are wary of taking on too much additional exposure to equities," he added.

Traders are seeking clues over the number of likely US interest-rate cuts this year as inflation slows.

Expectations are that the bank will lower borrowing costs 25 basis points next month, and at least once more before January, thanks to a string of data suggesting price rises have been brought under control.

Elsewhere, the yen weakened against the dollar following last week's gyrations.

Oil prices rose on supply-risks on the drawn-out conflict in the Middle East and owing to an escalation of tensions in major crude producer Russia.

The health ministry in Hamas-run Gaza said Monday that at least 39,897 people have been killed in the war between Israel and Palestinian militants, now in its 11th month.

In Russia, two regions bordering Ukraine ordered more evacuations as Moscow battled to contain an unprecedented push onto its territory.

- Key figures around 1530 GMT -

New York - Dow: DOWN 0.5 percent at 39,318.39 points

New York - S&P 500: DOWN 0.1 percent at 5,336.46

New York - Nasdaq Composite: UP 0.1 percent at 16,762.92

London - FTSE 100: UP 0.5 percent at 8,210.25 (close)

Paris - CAC 40: DOWN 0.3 at 7,250.67 (close)

Frankfurt - DAX: FLAT at 17,726.47 (close)

EURO STOXX 50: DOWN 0.2 percent at 4,344.22 (close)

Hong Kong - Hang Seng Index: UP 0.1 percent at 17,111.65 (close)

Shanghai - Composite: DOWN 0.1 percent at 2,858.20 (close)

Tokyo - Nikkei 225: Closed for a holiday

Euro/dollar: UP at $1.0934 from $1.0921 on Friday

Pound/dollar: UP at $1.2777 from $1.2760

Dollar/yen: UP at 147.35 yen from 146.63 yen

Euro/pound: UNCHANGED at 85.57 pence

Brent North Sea Crude: UP 1.6 percent at $80.94 per barrel

West Texas Intermediate: UP 2.1 percent at $78.43 per barrel

burs-rl/giv

S.Leonhard--VB