World stocks inch higher ahead of United States inflation data

Pedestrians walk in front of an electronics stock indicator showing share prices of the Tokyo Stock Exchange. – AFP

Pedestrians walk in front of an electronics stock indicator showing share prices of the Tokyo Stock Exchange. – AFP

"Concerns towards trade conflict stemming from US tariffs continue to linger in the background, capping risk appetite, pushing Treasury yields lower which in turn weighing on the dollar", said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

A key focus for investors is the USA consumer price data due at 1230 GMT.

"Today's CPI inflation data is likely to add further colour to the United States inflation picture, however it probably won't add any further clarity to the overall inflation outlook puzzle, given that the Fed doesn't use CPI as its inflation benchmark", said Michael Hewson, chief markets analyst at CMC Markets in London.

While the consumer price index is a popular barometer of economic health, it is not the primary gauge the Fed uses to determine whether it is meeting its mandate of price stability.

Spreadbetters expected a slightly lower start for European stocks, with Britain's FTSE.FTSE dipping 0.1 percent, Germany's DAX.GDAXI inching down 0.05 percent and France's CAC.FCHI shedding 0.07 percent.

Earlier in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 per cent after spending much of the day swerving in and out of negative territory.

The index had surged 1.5 percent on Monday following firm numbers on Friday, while low wage growth eased concerns about inflation and faster central bank rate hikes.

The U.S. currency was up 0.3 percent at 106.740 yen JPY=, trimming some losses after a suspected cover-up of a cronyism scandal put Japanese Premier Shinzo Abe and his close ally, Finance Minister Taro Aso, under fresh pressure.

The yen tends to suffer in an environment when riskier and higher-yielding assets are bid but Morgan Stanley strategists said in a note that a further deterioration in the political situation that affected the position of Abe, could see the yen "forcefully return towards its previous upward trend".

The announcement saw the dollar index, which measures the greenback against six other top world currencies, fall to a three-day low .DXY and meant the S&P 500 opened more subdued than traders had earlier expected.

Slovakia's 10-year bond yield rose as much as five basis points and the cost of insuring exposure to its debt hit the highest in nearly three months as the country's government inched towards collapse.

The U.S. 10-year Treasury yield fell as much as 3 basis points on the Tillerson news and was last trading at around 2.84 percent US10YT=RR , also held down by news of slowing inflation.

In commodities, crude oil prices extended losses after sliding the previous day amid ongoing concerns over rising US output.

Spot gold fell 0.2 per cent to $1,318 per ounce.

US crude futures CLc1 lost 3 cents to $61.32 per barrel after losing 68 cents the previous day.

The dollar rose to a two-week high and was up 0.7 percent on the day at 107.28 yen, its biggest single-day rise since late October.

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