Volkswacht Bodensee - Stock markets retreat before US inflation data

Most Asian indices also fell after a weak overnight lead from Wall Street with all eyes on surging prices in the world's biggest economy that have been fuelled by fallout from the Ukraine war.

Approaching the half-way stage, Frankfurt's DAX index slid 1.0 percent, London shed 0.4 percent and Paris dropped 0.8 percent.

Oil prices rebounded from much of Monday's sharp losses, as concerns subsided over weaker Chinese demand after Shanghai eased Covid restrictions.

The dollar remained elevated versus the yen, one day after hitting a 2015 high at 125.77 yen on expectations of tightening US monetary policy.

That was not far from the greenback's two-decade peak of 125.86 yen.

- 'Feeling the heat' -

"Investors feel the heat before today's inflation print," said Swissquote analyst Ipek Ozkardeskaya.

Economists predict US inflation will soar in March to nearly 8.5 percent, which would be the highest since late 1981.

Inflation had already spiked to 7.9 percent over the 12 months to February, the biggest increase in 40 years.

A fresh inflation surge could spur the US Federal Reserve into aggressive interest rate hikes.

That would in turn weigh on investor sentiment and overall activity in the world's biggest economy.

- 'Hotter than hot' -

"It's not really about the level of inflation anymore, as it has been well broadcast that CPI is hotter than hot," said Matt Simpson, senior market analyst at City Index.

"The big question is how long it takes to come back down and whether the Fed will tip the US into a recession in doing so."

Elsewhere Tuesday, bitcoin crept back above $40,000 on strengthening demand for the world's most popular virtual unit following recent heavy losses.

- Key figures around 1130 GMT -

London - FTSE 100: DOWN 0.4 percent at 7,586.40 points

Paris - CAC 40: DOWN 0.8 percent at 6,504.87

Frankfurt - DAX: DOWN 1.0 percent at 14,050.44

EURO STOXX 50: DOWN 0.7 percent at 3,813.76

Tokyo - Nikkei 225: DOWN 1.81 percent at 26,334.98 (close)

Hong Kong - Hang Seng Index: UP 0.52 percent at 21,319.13 (close)

Shanghai - Composite: UP 1.46 percent at 3,213.33 (close)

New York - Dow: DOWN 1.19 percent at 34,308.08 (close)

Brent North Sea crude: UP 3.4 percent at $101.81 per barrel

West Texas Intermediate: UP 3.3 percent at $97.43

Euro/dollar: DOWN at $1.0863 from $1.0884 late Monday

Dollar/yen: UP at 125.66 yen from 125.37 yen

Pound/dollar: DOWN at $1.2999 from $1.3030

Euro/pound: UP at 83.57 pence from 83.53 pence

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J.Horn--BTB