San Francisco Frontiers - Stock markets still buoyed by US inflation data

Wall Street rose by 0.4 percent at the start of trading, while in Europe, London's benchmark FTSE 100 index was up 0.3 percent, Frankfurt's DAX gained 0.5 percent and Paris's CAC 40 index added 0.1 percent.

"This week has been all about the inflation data and, frankly, it could be the dominant force in the markets now right up until the Jackson Hole symposium," said OANDA analyst Craig Erlam, referring to an upcoming meeting of central bankers from around the world at the end of August.

"The fact that inflation not only decelerated in the US, but at a faster pace than the consensus forecasts was a double win and risk assets are feeling the benefit," Erlam said.

Nevertheless, central banks are unlikely to signal the all-clear on inflation just yet, market watchers warn after official data on Wednesday showed US inflation slowing to 8.5 percent in July from 9.1 percent in June.

"Peak inflation might have been reached, but like the consumer price and producer price reports, it is also clear that the inflation rates remain unacceptably high," said Briefing.com analyst Patrick O'Hare.

Federal Reserve officials have therefore lined up to try to defuse speculation that the cycle of monetary policy tightening could be coming to an end any time soon.

- Half-point rise? -

San Francisco Fed chief Mary Daly told Bloomberg that she would likely support a half-point rate hike at a policy-setting meeting next month.

The markets are concerned that, after two consecutive increases in borrowing costs of three-quarters of a percentage point, further hikes of a similar magnitude could choke off economic recovery.

"I don't see this hump-shaped part where we raise interest rates to really high rates and then bring them down," Daly said.

"I think of raising them to a level that we know is going to be appropriate and then holding them there for a while so that we continue to bring inflation down until we're well and truly done."

UBS Financial Services analyst Terri Jacobsen said she expected "headwinds for the markets until we get some resolution on how far the Fed is going to go and how long they're going to raise interest rates".

On the corporate front, five major Chinese companies, including two of the country's largest oil producers, said they would delist from the New York Stock Exchange.

It comes amid rising tensions between Beijing and Washington over US House Speaker Nancy Pelosi's recent visit to Taiwan, which China claims as part of its territory.

Sinopec and PetroChina -- two of the world's biggest energy firms -- will apply for "voluntary delisting" of their American depositary shares, the companies said in separate statements.

The Aluminum Corporation of China, also known as Chalco, as well as China Life Insurance and a Shanghai-based Sinopec subsidiary, announced similar moves.

- Key figures at around 1335 GMT -

New York - Dow: 0.4 percent at 33,476.88 points

London - FTSE 100: UP 0.3 percent at 7,490.53

Frankfurt - DAX: UP 0.5 percent at 13,756.74

Paris - CAC 40: UP 0.1 percent at 6,548.07

EURO STOXX 50: UP 0.3 percent at 3,768.20

Tokyo - Nikkei 225: UP 2.6 percent at 28,546.98 (close)

Hong Kong - Hang Seng Index: UP 0.5 percent at 20,175.62 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,276.89 (close)

Euro/dollar: DOWN at $1.0274 from $1.0326 Thursday

Pound/dollar: DOWN at $1.2118 from $1.2196

Euro/pound: UP at 84.78 pence from 84.65 pence

Dollar/yen: UP at 133.67 yen from 133.05 yen

West Texas Intermediate: DOWN 1.5 percent at $92.82 per barrel

Brent North Sea crude: DOWN 1.3 percent at $98.29 per barrel

J.Peterson--SFF