San Francisco Frontiers - Stocks rally as inflation cools in US, Europe

Analysts said the data eased pressure on central banks having to think about raising interest rates further -- and could even be starting to consider cutting borrowing costs next year.

"US markets look set for another bumper day, with falling inflation in both the US and UK helping to drive home expectations that the next move... will be to cut rates rather than raise them," noted Joshua Mahony, chief market analyst at Scope Markets.

While the prospect of rate cuts next year hit the pound, the dollar managed to rise against main rivals, including also the euro and yen.

Oil prices dropped, adding to easing concerns over inflation.

Official data Tuesday showed US inflation at 3.2 percent in October, down from the 3.7 percent the previous month.

Figures Wednesday revealed UK inflation hit the lowest level in two years in October after consumer prices fell sharper than expected on easing energy bills.

French consumer prices rose by four percent last month, down on 4.9 percent in September. Italy's inflation rate plunged to 1.7 percent from 5.3 percent, separate data showed Wednesday.

News of cooler US inflation sent Wall Street and much of Europe surging Tuesday.

Asia picked up the baton Wednesday, with Hong Kong closing up almost four percent.

Europe's gains were more modest.

The European Commission on Wednesday lowered its eurozone growth forecast for 2023 and 2024, saying the high cost of living and interest rates were weighing on consumers and businesses.

Still, Fed officials remain cautious, with Chicago boss Austan Goolsbee saying that "progress continues, though we still have a way to go".

He added: "There are always some bumps in the road as inflation comes down."

But he was increasingly hopeful the economy could be on track for a soft landing, where inflation is brought to heel and the economy remains healthy.

- Key figures around 1130 GMT -

London - FTSE 100: UP 1.0 percent at 7,510.30 points

Paris - CAC 40: UP 0.6 percent at 7,227.01

Frankfurt - DAX: UP 0.5 percent at 15,699.07

EURO STOXX 50: UP 0.6 percent at 4,317.74

Tokyo - Nikkei 225: UP 2.5 percent at 33,519.70 (close)

Hong Kong - Hang Seng Index: UP 3.9 percent at 18,079.00 (close)

Shanghai - Composite: UP 0.6 percent at 3,072.83 (close)

New York - Dow: UP 1.4 percent at 34,827.70 (close)

Euro/dollar: DOWN at $1.0862 from $1.0880 Tuesday

Pound/dollar: DOWN at $1.2460 from $1.2496

Dollar/yen: UP at 150.41 from 150.37 yen

Euro/pound: UP at 87.14 pence from 87.05 pence

West Texas Intermediate: DOWN 0.7 percent at $77.70 per barrel

Brent North Sea crude: DOWN 0.6 percent at $81.97 per barrel

D.Robinson--SFF