Global Markets Stall As Oil Prices Pare Back Gains

Global stock markets stalled and oil prices flatlined Thursday, as a steady September inflation print renewed traders' concerns that interest rates will have to stay higher for longer to slow down price increases.

The US consumer price index rose 3.7 percent in September from a year ago, in line with analyst expectations but still above the Federal Reserve's long-term inflation target.

The Dow Jones Industrial Average closed down 0.5 percent, while the broad-based S&P 500 and tech-rich Nasdaq Composite Index both slipped by 0.6 percent.

"The US inflation report came in a little hotter than expected," Edward Moya, an analyst at trading platform OANDA, wrote in a note to clients.

London's FTSE 100 bucked the red trend, adding 0.3 percent on the back of solid gains for energy giants BP and Shell, while other major European indexes declined.

Oil prices, which surged following the outbreak of war between Israel and Hamas militants in Gaza, pared back earlier gains.

There has been plenty of optimism on equity trading floors in recent days after a US jobs report was neither too hot nor too weak, while a string of central bank decision-makers have suggested they could back a pause in any more monetary tightening.

Fawad Razaqzada at StoneX said he doubted that "today's CPI will move the needle in as far as November is concerned, meaning the Fed is likely to remain on pause" regarding rates.

Minutes from the Fed's most recent policy meeting showed they would keep interest rates elevated "for some time" until inflation has been brought to heel and the latest data underlined as much.

Futures traders currently assign a probability of close to 90 percent that the Fed will hold rates steady at its next meeting, according to data from CME Group.

Earlier in Asia, the mood was enhanced by news that China's massive sovereign wealth fund had bought stakes in the country's biggest banks, fuelling speculation it could broaden its reach to support beleaguered mainland markets.

Hong Kong and Shanghai equity indices rallied on news that China's Central Huijin Investment -- an arm of the $1.4 trillion China Investment Corp -- had bought $65 million of shares in the country's banking giants.

Analysts said the purchase of stakes in Bank of China, Agricultural Bank of China, China Construction Bank, and Industrial and Commercial Bank of China was aimed at boosting sentiment in mainland markets, which have been hit by worries over the stuttering economy.

New York - Dow: DOWN 0.5 percent at 33,631.14 points (close)

New York - S&P 500: DOWN 0.6 percent at 4,349.61 (close)

New York - Nasdaq: DOWN 0.6 percent at 13,574.22 (close)

London - FTSE 100: UP 0.3 percent at 7,644.78 points (close)

Frankfurt - DAX: DOWN 0.2 percent at 15,425.03 (close)

Paris - CAC 40: DOWN 0.4 percent at 7,104.53 (close)

EURO STOXX 50 (close): DOWN 0.1 percent at 4,198.23

Tokyo - Nikkei 225: UP 1.8 percent at 32,494.66 (close)

Hong Kong - Hang Seng Index: UP 1.9 percent at 18,238.21 (close)

Shanghai - Composite: UP 0.9 percent at 3,107.90 (close)

Euro/dollar: DOWN at $1.0534 from $1.0621 on Wednesday

Pound/dollar: DOWN at $1.2177 from $1.2314

Dollar/yen: UP at 149.79 yen from 149.18 yen

Brent North Sea crude: UP 0.2 percent at $86.00 per barrel

West Texas Intermediate: DOWN 0.7 percent at $82.91 per barrel