Volkswacht Bodensee - European, US stocks climb on hopes of inflation slowdown

"The expectation is inflation will have eased slightly when the US and UK report tomorrow and Wednesday respectively," said AJ Bell investment director Russ Mould.

London finished up 0.8 percent at a record close of 7,942.72 points as it bears down on the 8,000 level. Frankfurt rose 0.6 percent and Paris climbed 1.1 percent.

On Wall Street, the Dow was up 0.8 percent in late morning trading.

The Bank of England, the European Central Bank and the US Federal Reserve ramped up interest rates last year in efforts to tame sky-high inflation.

While US inflation has been trending down for several months, data showing the jobs market remained very tight in January indicated the world's top economy was still robust.

The employment reading led a number of Federal Reserve officials to insist there was still plenty of work to do before they were happy they had prices under control.

"These comments were particularly noteworthy given that they explicitly pushed back against the narrative of rate cuts by year end, which markets had started to assume would be coming fairly soon," said Michael Hewson at CMC Markets.

Nevertheless, the inflation numbers could be important, said Chris Beauchamp, chief market analyst at online trading platform IG.

"These have the potential to shift the narrative dramatically, and represent the next major possible turning point for equities," he said.

In Asia on Monday, equities fell on growing expectations that US interest rates will go much higher and stay there for longer than previously thought.

Sentiment in Europe was also boosted by news that the eurozone economy was forecast to narrowly avoid recession this winter.

The 20-nation area's economy is now expected to expand by 0.9 percent instead of 0.3 percent, as "favourable developments" helped it weather fallout from Russia's invasion of Ukraine, the European Union's executive arm said.

Inflation in the eurozone is also expected to slow more than previously forecast after the war sent oil and gas prices soaring last year.

Oil prices retreated Monday, having jumped more than two percent Friday in reaction to Russia's decision to slash output by 500,000 barrels per day.

The move came after a Western price cap that was imposed on exports in retaliation for Moscow's war on Ukraine.

"Oil prices are falling as investors focus on near-term demand concerns, overshadowing news on Friday that Russia will cut oil production," said market analyst Fiona Cincotta at City Index.

Those concerns included Chinese inflation data last Friday coming in lower than expected, "suggesting that the ramping up of the country's economy after Covid could take some time," she added.

- Key figures around 1630 GMT -

New York - Dow: UP 0.8 percent at 34,144.74 points

London - FTSE 100: UP 0.8 percent at 7,942.72 (close)

Frankfurt - DAX: UP 0.6 percent at 15,397.34 (close)

Paris - CAC 40: UP 1.1 percent at 7,208.59 (close)

EURO STOXX 50: UP 1.0 percent at 4,241.36 (close)

Tokyo - Nikkei 225: DOWN 0.9 percent at 27,427.32 (close)

Hong Kong - Hang Seng Index: DOWN 0.6 percent at 21,164.42 (close)

Shanghai - Composite: UP 0.7 percent at 3,284.16 (close)

Euro/dollar: UP at $1.0716 from $1.0684 on Friday

Pound/dollar: UP at $1.2132 from $1.2051

Euro/pound: DOWN at 88.35 pence from 88.56 pence

Dollar/yen: UP at 132.79 yen from 131.42 yen

Brent North Sea crude: DOWN 0.4 percent at $86.09 per barrel

West Texas Intermediate: DOWN 0.3 percent at $79.46 per barrel

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D.Schneider--BTB