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World stocks are lower before the US CPI, while oil is near multi-year highs

World stocks are lower before the US CPI, while oil is near multi-year highs

  • Summary of the following
  • Oil is steady at its multi-year highs of Monday, with the economy nearing its highest level in more than a year.
  • Futures on U.S. stock futures have fallen in Europe, but future prices in the United States have declined.
  • Dollar losses from Tuesday's one-year high to its lowest level since 2006.

World stocks have rallied around the week's lows, despite inflation worries ahead of Thursday'' U.S. consumer price data, with oil prices staying close to multi-year highs in many countries.

According to a Reuters poll, September U.S. CPI is expected to show 2% growth each month. Later this month, the minutes of the U.S. Federal Reserve's September policy meeting are due, and JPMorgan will be the first major bank to report at the unofficial start of company earnings season.

"The markets are at a crossroads," said Giles Coghlan, HYCM's chief currency analyst. "Are we in a stagflationary era - will we see low growth but high inflation?" That's the reason for the concern."

The MSCI world equity index (.MIWD00000PUS) was flat after falling in the previous three sessions. After the S&P 500 (.SPX) dropped 0.2% overnight due to earnings worries, futures for the s&p 500 fell 0.4%.

European stocks (.STOXX) (European stocks:.TOxXx) fell 0.4% and are nearly 5% below their August peak. UK stocks (.FTSE) fell 0.4%.

MSCI's broadest Asia-Pacific stock index outside Japan (.MIAPJ0000PUS), which measures around 0.3% higher than it had been a day earlier, its worst daily performance in three weeks.

The positive trade data from China, which showed that export growth unexpectedly increased in September, provided some relief to those worried about a sluggishing of the world's second-largest economy. read more.

Despite persistent weakness in real estate stocks, the data helped Chinese blue chips (.CSI300) jump 1.2%.

Japan's Nikkei (.N225) fell 0.3% as high energy prices and a weak yen pose security concerns for america that buys its oil from overseas.

The dollar fell 0.2% against an index of currencies after hitting a one-year high in the previous session due to rising expectations the Fed will announce easing of stimulus next month, with interest rate hikes following next year.

Three U.S. Federal Reserve policymakers on Tuesday said the economy has recovered sufficiently for the central bank to begin withdrawing its crisis-era support. read more

After hitting its highest level in nearly three years against the Japanese currency on Tuesday, the dollar remained steady at 113.58 yen. The euro was up 0.2% at $1.1551.

Ten-year Treasury yields in the United States meanwhile, after hitting four-month highs on Tuesday, have remained steady at 1.5804%.

German 10-year yield was unchanged at -0.10%, its highest since late May.

"There is a lot of pressure from the inflation story," said Charles Diebel, director of fixed income at asset manager Mediolanum, pointing to rising expectations of UK rate hikes.

"People are worried about the same happening elsewhere, they fear inflation will be so severe that central banks will have to respond."

Oil prices sank due to inflation worries, despite rising prices for energy-generating fuels like coal and natural gas limiting losses.

Brent crude was steady at $83.40 a barrel, off Monday's three-year high of $84.60, while U.S. crude decreased to $80.63 from Mondays seven- year high.

Gold, which is used as a hedge against inflation, rose 0.3% to $1,765 an ounce.

Sujata Rao in London contributed to this report; Edmund Blair and Lincoln Feast assisted in the editing.

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