San Francisco Frontiers - Stock markets hold onto gains after rally

Asian stock markets advanced following European and Wall Street gains Tuesday, thanks to a growing belief the Federal Reserve was finished with hiking US interest rates.

Optimism was boosted also by a report that China is considering a large burst of economic stimulus.

Eyes will now turn to the release of minutes from the Fed's September policy meeting.

Despite the uncertainty caused by the Israel-Hamas crisis, the mood on trading floors has improved after a healthy US jobs report last week and dovish comments from a number of top US monetary policymakers.

European stocks were steadier "following the best session in nearly a year (Tuesday), driven by less hawkish tones from Fed policymakers", noted Victoria Scholar, head of investment at Interactive Investor.

"Slowing sales from (luxury group) LVMH have dragged the (Paris) CAC 40 into the red while Burberry has followed suit, slumping to the bottom of the FTSE 100" in London.

Oil prices retreated after Monday's surge fuelled by Hamas's deadly attack on Israel that sparked fears of a wider conflict in the crude-rich Middle East.

But European gas prices struck 50 euros on geopolitical risks and colder weather Wednesday, the highest level since April. They later fell back to under 48 euros.

All three markets on Wall Street posted another day of gains Tuesday thanks to the more risk-on environment, while the so-called fear gauge hit a two-week low.

"A steady stream of dovish messaging from the Fed is just what the rally doctor ordered," said Stephen Innes at SPI Asset Management.

He added that with 10-year US Treasury yields nearly 25 basis points down from their pre-jobs data level "there is a growing sense we have seen peak rates, but significantly, investors are strongly coming around to the idea that the Fed has finally reached the end of its aggressive rate hike runway".

But data on US producer prices showed inflation has yet to be tamed, which excluding volatile food and energy prices rose a more-than-expected 0.3 percent month-on-month.

"The key takeaway from the report is that it marked an interruption in the disinflation seen in producer prices, which will keep market participants worried about pass-through effects to the consumer and rates staying higher for longer because inflation is staying higher for longer than the Fed would like," said Briefing.com analyst Patrick O'Hare.

- Key figures around 1330 GMT -

New York - Dow: UP 0.3 percent at 33,835.23 points

London - FTSE 100: UP 0.2 percent at 7,642.57

Frankfurt - DAX: UP 0.3 at 15,471.63

Paris - CAC 40: DOWN 0.1 percent at 7,154.36

EURO STOXX 50: UP 0.1 percent at 4,210.39

Tokyo - Nikkei 225: UP 0.6 percent at 31,936.51 (close)

Hong Kong - Hang Seng Index: UP 1.3 percent at 17,893.10 (close)

Shanghai - Composite: UP 0.1 percent at 3,078.96 (close)

Euro/dollar: UP at $1.0618 from $1.0609 on Tuesday

Pound/dollar: UP at $1.2316 from $1.2281

Dollar/yen: UP at 148.93 yen from 148.68 yen

Euro/pound: DOWN at 86.21 pence from 86.32 pence

Brent North Sea crude: DOWN 1.1 percent at $86.67 per barrel

West Texas Intermediate: DOWN 1.4 percent at $84.81 per barrel

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T.Rivera--SFF