San Francisco Frontiers - Stocks fall as rate-hope rally fades

Slowing US inflation lit a fire under global equities this week, cementing traders' views that the Federal Reserve would no longer need to hike interest rates and even fuelling talk of cuts next year.

Wall Street's main indices opened lower after news that US industrial production declined more than expected in October by 0.6 percent.

Oil prices fell almost four percent on concern about demand.

Company results also weighed on markets, with shares in Walmart tumbling after the retail giant narrowly lifted its full-year forecast but gave a cautious outlook on consumer spending.

Tech firm Cisco Systems slumped as it projected weaker than expected sales in the upcoming quarter.

Shares in Chinese e-commerce giant Alibaba plummeted in New York after it said it would cancel the spinoff of its cloud computing arm because of US curbs on chip exports.

"Market optimism appears to be cooling off after a bumper period of gains for equity markets, built on growing expectations that the Fed are finished with their historic tightening process," noted Joshua Mahony, chief market analyst at Scope Markets.

"With markets now pricing a mere one-percent chance of another hike, markets are now more concerned with the timing of the first rate cut and the pace of easing."

London and Paris were down two hours from the close although Frankfurt bucked the trend.

Shares in Burberry tumbled more than nine percent after the British luxury fashion house warned over future profits as global demand for high-end clothing weakens.

Hong Kong, which jumped almost four percent Wednesday, led losses Thursday as it gave up one percent, while Tokyo and Shanghai also closed in the red.

"We're seeing a more muted session in financial markets on Thursday following a couple of days in which investors have been very encouraged by the economic data," said Craig Erlam, senior market analyst at trading platform OANDA.

- Biden, Xi hold talks -

Focus was also on US President Joe Biden and his much-anticipated talks with his Chinese counterpart Xi Jinping.

Biden described the talks as the "most constructive and productive" of their relationship, as the two sought some common ground after years of tensions.

"We've made some important progress, I believe," he told reporters.

The meeting in California resulted in agreements on several issues including high-level military communications and artificial intelligence.

Long-running tensions between the two global superpowers have weighed heavily on markets, with investors concerned about the impact on trade and geopolitics.

Later, Xi told US business leaders that China was "ready to be a partner and friend of the United States".

US markets also digested the passage of a stop-gap funding bill to keep federal agencies running for another two months and avert a painful holiday season government shutdown.

- Key figures around 1515 GMT -

New York - Dow: DOWN 0.2 percent at 34,931.52

London - FTSE 100: DOWN 0.9 percent at 7,422.08

Paris - CAC 40: DOWN 0.4 percent at 7,183.40

Frankfurt - DAX: UP 0.4 percent at 15,817.30

EURO STOXX 50: DOWN 0.1 percent at 4,309.46

Tokyo - Nikkei 225: DOWN 0.3 percent at 33,424.41 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 17,832.82 (close)

Shanghai - Composite: DOWN 0.7 percent at 3,050.93 (close)

Euro/dollar: UP at 1.0884 from $1.0850 on Wednesday

Pound/dollar: UP at $1.2443 from $1.2414

Dollar/yen: DOWN at 150.49 yen from 151.37 yen

Euro/pound: UP at 87.48 pence from 87.36 pence

West Texas Intermediate: DOWN 4.0 percent at $73.63 per barrel

Brent North Sea crude: DOWN 3.7 percent at $78.18 per barrel

H.King--SFF