San Francisco Frontiers - Stock markets mixed ahead of US inflation report

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

Despite 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.

Minutes from the most recent Fed policy meeting released Wednesday indicated that officials agreed to hold rates high "for some time" until confident that inflation is cooling sustainably.

"But those minutes were before the conflict between Israel and Hamas," said Peter Cardillo of Spartan Capital, adding that this was probably why markets "didn't react" to the Fed's tone.

All three key US indices ended the day higher, with the Nasdaq Composite Index gaining 0.7 percent.

European stocks were steadier "following the best session in nearly a year (Tuesday), driven by less hawkish tones from Fed policymakers", said 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, Scholar added.

- Oil down -

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

"Crude prices are lower after a mountain of geopolitical risk to start the trading week didn't yield any real changes in crude output and transit," said analyst Edward Moya at trading platform OANDA.

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 47 euros.

"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 coming down, "there is a growing sense we have seen peak rates."

But Moya of OANDA warned in a note that the consumer price index -- a key inflation gauge -- could come in hot on Thursday, given that producer prices have been boosted by higher energy and food prices.

A key takeaway from Wednesday's producer prices report "is that it marked an interruption in the disinflation seen," said Briefing.com analyst Patrick O'Hare.

This will keep market participants worried about pass-through effects to the consumer and rates staying higher for longer because inflation remains elevated, he added.

- Key figures around 2040 GMT -

New York - Dow: UP 0.2 percent at 33,804.87 points (close)

New York - S&P 500: UP 0.4 percent at 4,376.95 (close)

New York - Nasdaq: UP 0.7 percent at 13,659.68 (close)

London - FTSE 100: DOWN 0.1 percent at 7,620.03 (close)

Frankfurt - DAX: UP 0.2 at 15,460.01 (close)

Paris - CAC 40: DOWN 0.4 percent at 7,131.21 (close)

EURO STOXX 50: DOWN 0.1 percent at 4,200.80 (close)

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 $1.0621 from $1.0609 on Tuesday

Pound/dollar: UP at $1.2314 from $1.2281

Dollar/yen: UP at 149.18 yen from 148.68 yen

Euro/pound: DOWN at 86.23 pence from 86.32 pence

Brent North Sea crude: DOWN 2.1 percent at $85.82 per barrel

West Texas Intermediate: DOWN 2.8 percent at $83.49 per barrel

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Q.Taylor--SFF