Portugal Colonial - Nervous investors trade cautiously before US inflation report

Oil prices dipped on profit-taking, a day after reaching multi-month highs on worries about Russian supplies following a Ukrainian attack on one of the country's tankers.

Output cuts by Moscow and OPEC giant Saudi Arabia were also providing strong support to the market, analysts said.

The feel-good factor that characterised much of July has given way to uncertainty about the US central bank's plans amid warnings from policymakers that more was needed to finally get prices under control.

Ongoing weakness in China's economy -- and lack of concrete action by authorities to address it -- are also taking their toll on investor sentiment, helping to drive a retreat in global markets in recent weeks.

All eyes are on the release Thursday of the US consumer price index (CPI) for last month, a closely watched gauge of inflation that plays a key role in the Fed's decision-making on monetary policy.

While rate hikes have dampened steep American price rises -- from a four-decade high of 9.1 percent in June last year to three percent now -- observers warned that officials would find it harder to get inflation back down to its two-percent target.

After falling for 12 straight months, forecasts are for a slight uptick in the CPI, partly because of rising oil costs.

The US central bank hiked in July but indicated that could be the last such move, after more than a year of tightening.

City Index analyst Fawad Razaqzada said a "small beat" would be tolerable for investors.

"They will be looking for signs that the health and sentiment of the consumer remains positive, enough not to increase the risks of a further Fed rate increase, and yet not too depressing to raise recession alarm bells."

All three main indices on Wall Street ended in the red Wednesday, dragged down by tech firms, and Asia largely followed suit Thursday.

Europe's main stock markets made solid gains nearing the half-way stage, with the exception of London.

Luxury and travel firms boosted Eurozone markets after China lifted a Covid-era ban on outbound group tours to dozens of countries, which could see crowds of Chinese tourists return to destinations around the world.

Investors were keeping tabs on China, hoping for measures to support the ailing economy, after news that the country had slipped into deflation for the first time in more than two years and exports plunged at their fastest pace since the early days of the pandemic.

With China being a key driver of global growth, the long-running slowdown is fuelling concerns about possible spillover effects.

There was also a little nervousness after President Joe Biden signed an executive order directing the Treasury to restrict certain US investments in China in sensitive high-tech sectors, including semiconductors, quantum computing and artificial intelligence.

Beijing hit out at the move, saying it "severely disrupts the security of global industrial and supply chains".

- Key figures around 1000 GMT -

London - FTSE 100: FLAT at 7,587.15 points

Frankfurt - DAX: UP 0.4 percent at 15,911.06

Paris - CAC 40: UP 0.9 percent at 7,388.12

EURO STOXX 50: UP 0.8 percent at 4,354.29

Tokyo - Nikkei 225: UP 0.8 percent at 32,473.65 (close)

Hong Kong - Hang Seng Index: FLAT at 19,248.26 (close)

Shanghai - Composite: UP 0.3 percent at 3,254.56 (close)

New York - Dow: DOWN 0.5 percent at 35,123.36 (close)

Euro/dollar: UP at $1.1021 from $1.0975 on Wednesday

Pound/dollar: UP at $1.2757 from $1.2720

Euro/pound: UP at 86.41 from 86.26 pence

Dollar/yen: UP at 143.85 yen from 143.38 yen

West Texas Intermediate: DOWN 0.3 percent at $84.12 per barrel

Brent North Sea crude: DOWN 0.1 percent at $87.45 per barrel

P.Serra--PC