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European, Asian stocks rise as traders eye US inflation

Investors are awaiting the release this week of key US inflation data and the Federal Reserve's update on the state of the economy (Daniel ROLAND)
Investors are awaiting the release this week of key US inflation data and the Federal Reserve's update on the state of the economy (Daniel ROLAND)

Asian and European stock markets rose Monday in holiday-thinned trading, as investors await fresh international inflation data for more clarity on the outlook for interest rates.

Contrasting sentiment has emerged on either side of the Atlantic on how long it will take for rates cuts to start.

Sentiment took a blow last week after Federal Reserve officials warned they wanted more evidence that prices were being brought under control, fuelling worries they might not cut this year.

That was compounded by figures suggesting the world's number one economy remained strong, despite borrowing costs being kept at two-decade highs.

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Wall Street's broad-based S&P 500 index and the tech-heavy Nasdaq both benefited Friday from figures showing one-year expectations for prices edged down slightly, while consumer sentiment picked up.

Monday the US markets were closed for a holiday -- as was London.

Asia was boosted by news that profits at China's industrial companies rose in April after a March drop.

Hong Kong, Tokyo, Shanghai, Sydney, Seoul, Mumbai, Singapore, Bangkok and Taipei all rose, though there were some losses in Jakarta, Manila and Wellington.

Paris and Frankfurt both added around half of one percent and Milan gained 0.8 percent despite a survey showing German business sentiment stagnated in May after months of improvement, denting hopes that Europe's biggest economy will make a strong recovery.

The main continental European indices were underpinned by a slight decline in bond market rates, as well as growing sentiment the European Central Bank, which next meets June 6, could be moving towards a rate cut.

Bank of Finland governor Olli Rehn followed up on comments Friday that cuts could begin in June by saying in a speech published on the bank's website that inflation was converging towards the two percent target.

He said this meant the time "is thus ripe in June to ease the monetary policy stance and start cutting rates," barring geopolitical problems and renewed upward pressure on energy prices.

ECB chief economist Philip Lane meanwhile told the Financial Times in an interview that "barring major surprises" the next direction of rates in Europe will be downward.

Eurozone inflation data for May will be released on Friday and a further cooling would reaffirm expectations of a June cut.

Underpinning the idea of a decoupling on rates policy in the United States and the Eurozone, Swissquote senior analyst Ipek Ozkardeskaya said "while last week began on optimism that inflation could allow the Fed to cut rates as early as in September, this week begins on pessimism that the latter will probably not be possible."

Focus now turns to the release of the US personal consumption expenditures (PCE) index -- the Fed's preferred gauge of inflation.

Elsewhere, oil prices extended recent gains ahead of a key June 2 meeting of OPEC and other major producers, with expectations high that they will maintain output cuts.

"Based on current market expectations that OPEC+ is likely to extend cuts, oil's risks are skewed to the upside," said Qisheng Futures analyst Gao Jian.

In company news, the stock price of the electric vehicle arm of China's struggling property giant Evergrande more than doubled after it emerged liquidators were in talks with potential buyers.

Evergrande New Energy Vehicle piled on 113 percent in Hong Kong, representing the biggest intra-day jump in nearly 10 years, according to Bloomberg News.

- Key figures around 1550 GMT -

Paris - CAC 40: UP 0.5 percent at 8,132.49 points (close)

Frankfurt - DAX: UP 0.4 percent at 18,784.50 (close)

EURO STOXX 50: UP 0.1 percent 5,052.76

Tokyo - Nikkei 225: UP 0.7 percent at 38,900.02 (close)

Hong Kong - Hang Seng Index: UP 1.2 percent at 18,827.35 (close)

Shanghai - Composite: UP 1.1 percent at 3,124.04 (close)

New York - Dow: Closed for a holiday

London - FTSE 100: Closed for a holiday

Dollar/yen: DOWN at 156.82 from 156.93 yen on Friday

Euro/dollar: UP at $1.0857 from $1.0851

Pound/dollar: UP at $1.2774 from $1.2735

Euro/pound: DOWN at 85.01 from 85.17 pence

West Texas Intermediate: UP 1.1 percent at $78.57 per barrel

Brent North Sea Crude: UP 1.0 percent at $82.97 per barrel

dan-lth/cw/tw