Volkswacht Bodensee - Stocks steady as traders mull interest rate outlooks

A forecast-busting US jobs report Friday reinforced optimism that the world's top economy was well on the recovery track, but also ramped up expectations of an interest rate hike by the Fed in March.

It comes as surging global inflation resulted in the Bank of England last week hiking its main interest rate for a second meeting in a row, while the European Central Bank signalled that it may raise borrowing costs this year.

"There are plenty of reasons for investors to be cautious," said Russ Mould, investment director at AJ Bell.

"Strong US jobs data last week might suggest the Fed pushes up rates faster and harder than currently expected. Ongoing tensions between Ukraine and Moscow also hang over markets."

With US inflation data this week tipped to show prices rising at a pace not seen in 40 years, traders are becoming increasingly anguished that Federal Reserve rate hike plans could jeopardise the recovery.

There is mounting talk that the US central bank will have to hike borrowing costs at least four times this year -- with some predicting as many as seven rises could occur.

Elsewhere Monday, oil prices retreated after European benchmark contract, Brent North Sea crude, hit $94 -- the highest level for more than seven years.

Expectations that energy demand will continue to improve as the world economy reopens, as well as a cold snap in the United States and uncertainty over the Russia-Ukraine stand-off are expected to keep crude futures well supported according to analysts.

Still, signs of a breakthrough in Iran nuclear talks could help staunch the surge, they added.

- Key figures around 1200 GMT -

London - FTSE 100: UP 0.3 percent at 7,537.48 points

Frankfurt - DAX: UP 0.2 percent at 15,124.05

Paris - CAC 40: DOWN 0.1 percent at 6,942.35

EURO STOXX 50: FLAT at 4,085.22

Tokyo - Nikkei 225: DOWN 0.7 percent at 27,248.87 (close)

Hong Kong - Hang Seng Index: FLAT at 24,579.55 (close)

Shanghai - Composite: UP 2.0 percent at 3,429.58 (close)

New York - Dow: DOWN 0.1 percent at 35,089.74 (close)

Euro/dollar: DOWN at $1.1444 from $1.1453 Friday

Pound/dollar: DOWN at $1.3514 from $1.3527

Euro/pound: UP at 84.68 pence from 84.65 pence

Dollar/yen: DOWN at 114.92 yen from 115.21 yen

Brent North Sea crude: DOWN 0.3 percent at $93.03 per barrel

West Texas Intermediate: DOWN 0.8 percent at $91.57 per barrel

L.Dubois--BTB