San Francisco Frontiers - Europe's surging inflation spreads gloom in stock markets

The Paris and Frankfurt exchanges both sank after France, Germany and Italy revealed that prices in their countries were surging, particularly at the petrol pumps.

France's annual inflation rate hit its highest level since February 2024, while in Italy, inflation was at 4.2 percent, nearly a full percentage point above the rate recorded in August.

"This morning's economic releases from the eurozone have done little to improve the outlook, with a combination of rising inflation and weakening sentiment reinforcing concerns about stagflation," said Forex.com analyst Fawad Razaqzada.

Meanwhile in the US, traders were waiting for figures on inflation and jobs for clues on the likely path for interest rates.

Oil prices remained high on Wednesday, slightly up on the previous day, fuelling global inflation and multi-decade highs in bond yields.

London's FTSE 100 ticked up after data showed the UK economy grew more than initially estimated in the second quarter.

London-listed mining firms were boosted by data out of China -- a huge consumer of industrial metals --showing the country's factory activity grew this month for the first time since June.

That news gave a boost to the Hong Kong and Shanghai stock markets, which edged up slightly at the close along with Tokyo.

Investors are now waiting for Wednesday's release of US personal consumption expenditure data for October, with the Federal Reserve's preferred gauge of inflation likely to play a key role in next month's policy decision.

Officials are focused on bringing down prices and an above-forecast reading could strengthen the case for a second successive rate hike.

News that Saudi Arabia had restored about half the capacity of its East-West pipeline -- after it was closed this month following drone attacks -- helped boost sentiment during Asia trading hours. The Trump administration also ordered the release of more oil from US emergency reserves.

The Saudi East-West pipeline has been a key alternative route for oil shipments from the kingdom while tanker traffic through the Strait of Hormuz remains below pre-war levels due to the risk of Iranian attacks.

"This helped to dial down some of the nervousness about inflation and saw government bond yields, which had been testing new multi-decade highs, ease back," said Dan Coatsworth, head of markets at AJ Bell.

However, Deutsche Bank's Jim Reid noted that investors were "still pricing in a lengthier period of disruption, even as increased oil flows out of the Gulf have eased the near-term pressure".

- Key figures at around 1330 GMT -

London - FTSE 100: UP 0.2 percent at 10,653.05 points

Paris - CAC 40: DOWN 0.5 percent at 7,995.5

Frankfurt - DAX: DOWN 0.1 percent at 25,371.38

Tokyo - Nikkei 225: UP 1.9 percent at 66,753.72 (close)

Hong Kong - Hang Seng Index: UP 0.4 percent at 24,613.27 (close)

Shanghai - Composite: UP 0.3 percent at 3,842.19 (close)

New York - Dow: DOWN 0.3 percent at 51,349.92 (close)

West Texas Intermediate: UP 1.2 percent at $90.58 per barrel

Brent North Sea Crude: UP 0.6 percent at $103.19 per barrel

Dollar/yen: DOWN at 156.82 yen from 157.32 yen on Tuesday

Euro/dollar: UP at $1.1367 from $1.1339

Pound/dollar: UP at $1.3288 from $1.3204

Euro/pound: DOWN at 85.53 pence from 86.00 pence

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K.Hernandez--SFF