Volkswacht Bodensee - Stocks advance on eve of US inflation data

Decision-makers at the central bank had lined up last week to warn that more tightening could be warranted to bring prices under control, tempering optimism that the hiking cycle had come to an end.

That sparked a wide sell-off on Friday, though a tech-led surge on Wall Street before the weekend provided traders some support on Monday and the positivity spilled over into Europe.

However, with focus firmly on Tuesday's upcoming US consumer price index data, equity gains were limited while the dollar was mixed.

"The forthcoming CPI report holds the potential to reintroduce the possibility of a rate hike," said Stephen Innes at SPI Asset Management.

Investors fret over interest rate hikes because they ramp up the cost of borrowing for businesses and consumers alike, and therefore crimp economic activity.

Fears that global rates could remain elevated for an extended period were fanned by European Central Bank President Christine Lagarde, who on Friday forecast a resurgence of inflation.

She also said officials would not start cutting rates for at least "the next couple of quarters".

Expectations that US borrowing costs will not come down anytime soon boosted the dollar, with traders keeping an eye on its movement against the yen after Japanese authorities warned they could intervene to support their currency.

Investors will be watching also a planned meeting between US President Joe Biden and Chinese leader Xi Jinping at the APEC summit in San Francisco later in the week amid signs tensions were easing between the economic superpowers.

Chinese officials said the two will discuss "global peace and development".

- Key figures around 1100 GMT -

London - FTSE 100: UP 0.6 percent at 7,404.56 points

Paris - CAC 40: UP 0.5 percent at 7,077.72

Frankfurt - DAX: UP 0.3 percent at 15,275.46

EURO STOXX 50: UP 0.5 percent at 4,219.92

Tokyo - Nikkei 225: UP 0.1 percent at 32,585.11 (close)

Hong Kong - Hang Seng Index: UP 1.3 percent at 17,426.21 (close)

Shanghai - Composite: UP 0.3 percent at 3,046.53 (close)

New York - Dow: UP 1.2 percent at 34,283.10 (close)

Euro/dollar: UP at $1.0693 from $1.0686 on Friday

Dollar/yen: UP at 151.74 yen from 151.47 yen

Pound/dollar: UP at $1.2248 from $1.2224

Euro/pound: DOWN at 87.32 pence from 87.39 pence

Brent North Sea crude: UP 0.3 percent at $81.65 per barrel

West Texas Intermediate: UP 0.3 percent at $77.36 per barrel

L.Wyss--VB