Global shares, US dollar rise as inflation data reinforces Fed hopes

By Chris Prentice and Tom Wilson

NEW YORK/LONDON (Reuters) -Global shares and Wall Street indexes rose on Wednesday after an in-line inflation reading kept intact bets on the Federal Reserve cutting interest rates later this month.

The dollar hit a two-week high, and gold prices rose. Oil prices pared gains after producers group OPEC cut demand growth forecasts.

The Dow Jones Industrial Average rose 14.83 points, or 0.03%, to 44,262.66, the S&P 500 rose 44.19 points, or 0.73%, to 6,079.10 and the Nasdaq Composite rose 262.88 points, or 1.34%, to 19,950.12.

MSCI's gauge of stocks across the globe rose 3.81 points, or 0.44%, to 870.22.

A Labor Department report showed the Consumer Price Index (CPI) rose 0.3% on a monthly basis in November, matching the 0.3% increase forecast by economists polled by Reuters. Annually, it stood at 2.7%, in line with estimates.

"Everything's exactly in line with estimates ... it's very likely that you will see the Fed probably go ahead with what they projected, cutting 25 basis points (later this month)," said David Miller, chief investment officer at Catalyst Funds.

The European STOXX 600 index rose 0.12% while emerging market stocks fell 4.28 points, or 0.38%.

The yield on benchmark U.S. 10-year notes rose 2.1 basis points to 4.24%, from 4.221% late on Tuesday. [US/]

The dollar index , which measures the greenback against a basket of currencies including the yen and the euro,rose 0.3% to 106.67, with the euro down 0.35% at $1.049.

Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5%.

China's yuan fell and currencies across Asia lost ground on the dollar after Reuters reported that China was considering allowing a weaker currency next year to weather any higher tariffs.

CUTS AHEAD

The Canadian dollar remained near a 4-1/2 year low set on Tuesday as traders saw an 89% chance of a super-sized 50 basis point rate cut by the Bank of Canada later on Wednesday. [CAD/]

Canada has already reduced rates by 125 basis points (bps) this cycle but news last week that the jobless rate spiked to an eight-year high of 6.8% in November has driven bets on an extra 50 bps of cuts, which would bring the overnight rate to 3.25%.

"We think today's Bank of Canada decision may have some read over to the US," ING analysts wrote, noting that a 50 bps cut would signal a "strong view" that the Fed will cut rates by 25 bps next week.

Markets have fully priced a European Central Bank rate cut on Thursday and a 61% chance of a 50 bps cut from the Swiss National Bank, which would help cool a rally in the franc.

Spot gold rose 0.77% to $2,714.39 an ounce.



Elsewhere in commodities, arabica coffee prices hit a record as dealers worried that a drought would hurt output for top producer Brazil. [SOF/]

U.S. crude rose 1.18% to $69.40 a barrel and Brent rose to $72.81 per barrel, up 0.86% on the day. [O/R]

Source: Investing.com