San Francisco Frontiers - Global markets diverge before US inflation, ECB

"Traders will likely see today as the calm before the storm, with central banks, earnings, and inflation set to drive volatility higher over the final three days of the week," said Scope Markets analyst Joshua Mahony.

Frankfurt and Paris stocks languished in negative territory as caution prevailed before Thursday's rate call from the European Central Bank. London was buoyed partly by an upbeat outlook from energy major BP.

Oil edged higher on renewed concern that the Israel-Hamas war could spiral into a broader conflict in the crude-rich Middle East.

"European markets showed signs of nervousness ahead of the ECB's interest rate decision later this week,” said AJ Bell investment director Russ Mould.

"Forecasts imply the ECB will hold rates at 4.5 percent, yet last week's stronger than expected US jobs data and the ongoing strength in the oil price have raised expectations that the Federal Reserve will push back rate cuts until later in the year."

Asian stocks mostly rose Tuesday as attention also turned to crucial US inflation data that could play a pivotal role in the Fed's thinking, with investors lowering expectations for how many cuts it will deliver.

With US consumer prices picking up in January and February, the jobs market still strong and the economy in rude health, traders have regularly tweaked their forecasts for monetary policy easing this year, and some are even contemplating no cuts before 2025.

Stocks had surged in New York on Friday after closely watched March non-farm payroll figures came in way above estimates, with traders focusing on the tepid wage growth.

But a miss to the upside in this week's consumer price index report could send shivers through markets, analysts warn.

"This upcoming release is arguably the most critical economic print of the year," said Stephen Innes at SPI Asset Management.

"Investors eagerly await this report in hopes that it will offer more insights into the Federal Reserve's potential timeline for rate cuts and the frequency of such cuts.

"The big problem hiding in plain sight is that a larger segment of the investment community is even considering the prospect of no rate cuts this year, adding further uncertainty to the market outlook."

Wall Street's three main indexes ended Monday on a flat note but Asia was largely positive in trading on Tuesday.

The Tokyo stock market was boosted by a weaker yen, which is approaching the 152-per-dollar level at which many think could spark an intervention by Japanese authorities.

The end of the week also sees the start of the US earnings season, with JPMorgan, Wells Fargo and Citigroup first up.

- Key figures around 1000 GMT -

London - FTSE 100: UP 0.1 percent at 7,950.52 points

Paris - CAC 40: DOWN 0.6 at 8,070.99

Frankfurt - DAX: DOWN 0.7 percent at 18,192.21

EURO STOXX 50: DOWN 0.6 percent at 5,014.57

Tokyo - Nikkei 225: UP 1.1 percent at 39,773.13 (close)

Hong Kong - Hang Seng Index: UP 0.6 percent at 16,828.07 (close)

Shanghai - Composite: UP 0.1 percent at 3,048.54 (close)

New York - Dow: FLAT at 38,892.80 (close)

Dollar/yen: DOWN at 151.81 yen from 151.82 yen on Monday

Euro/dollar: UP at $1.0861 from $1.0859

Pound/dollar: UP at $1.2668 from $1.2655

Euro/pound: DOWN at 85.73 pence from 85.80 pence

Brent North Sea Crude: UP 0.3 percent at $90.61 per barrel

West Texas Intermediate: UP 0.2 percent at $86.61 per barrel

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