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Stocks rise after CPI data reassures investors By Reuters

© Reuters. FILE PHOTO: People wearing protective masks, amid the coronavirus disease (COVID-19) outbreak, are reflected on an electronic board displaying Japan’s stock prices outside a brokerage in Tokyo, Japan, October 5, 2021. REUTERS/Kim Kyung-Hoon

By Herbert Lash and Carolyn Cohn

NEW YORK/LONDON (Reuters) -The dollar was little changed and a gauge of global equity markets edged higher on Friday after data showed inflation increased as expected in November, easing concerns the Federal Reserve will need to aggressively tighten monetary policy.

The three major U.S. indices rose, with the Nasdaq close to breakeven, but shares in Europe closed lower on concerns about the Omicron variant of the coronavirus and what higher rates may mean for equities.

The dollar eased as investors, who had been bracing for a much higher reading of inflation, bet the number reported would not change the pace of interest rate hikes.

The U.S. consumer price index increased 0.8% last month after surging 0.9% in October, while it accelerated 6.8% on an annualized basis, marking the biggest year-on-year rise since June 1982.

The Fed’s plans to taper bond purchases, likely to be announced next week when policymakers meet, follows in line with what the U.S. central bank has indicated, said Brian Pietrangelo, managing director of Investment Strategy at Key Private Bank.

“The Fed’s been pretty transparent, which is why you’re seeing a positive move in the stock market today and not a lot of reaction in the bond market,” said Pietrangelo, adding he expects two or three interest rate hikes next year.

“We believe the market can handle rate increases as long as they’re transparent and they’re at the right pace,” he said.

MSCI’s all-country world index advanced 0.10% but the broad STOXX Europe 600 index fell 0.29% on Omicron concerns after England introduced further restrictions this week.

On Wall Street, the rose 0.16%, the gained 0.48% and the advanced 0.28%.

The forex market had positioned for a higher CPI reading, leading to a weaker dollar, said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets.

“The FX market has been extremely long U.S. dollars for several months so with this number coming in benign we’re almost out of events that could push the dollar materially higher before year-end,” he said.

The fell 0.149%, with the euro up 0.15% to $1.1309. The Japanese yen strengthened 0.09% versus the greenback at 113.35 per dollar.

Oil prices were on track for their biggest weekly gain since late August, with market sentiment buoyed by easing concerns over Omicron’s impact on global economic growth and fuel demand.

was up $0.11 at $74.53 a barrel. was up $0.17 at $71.11 a barrel.

The yield on fell 2.2 basis points to 1.465%.

Gold gained on Friday as its safe-haven appeal was boosted by elevated U.S. consumer prices, which also cooled some bets for aggressive interest rate hikes since the jump in inflation was not as big as expected.

U.S. gained 0.4% at $1,784.30 an ounce.

Shares in China Evergrande Group lost 1.67% after Fitch downgraded it to restricted default status.

Contagion was limited, however, with Hong Kong stocks off 1.07%.

Read More : Stocks rise after CPI data reassures investors By Reuters

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