Portugal Colonial - European, US stock markets up as bets build on rate cuts

The dollar, which has been under pressure over the prospect of rate cuts, firmed against main rivals Wednesday.

Oil prices extended gains before an output meeting of OPEC and its allies, notably Russia, on Thursday.

"Comments from a usually hawkish Fed policymaker that there could be room for cuts to interest rates... look set to push Wall Street higher at the open," noted Susannah Streeter, head of money and markets at Hargreaves Lansdown, in a note before trading opened in New York.

Wall Street's main indices did indeed open higher, but gains had largely disappeared by late morning.

"There are various factors driving the positive bias this morning, but one factor stands above all: falling interest rates," said Patrick O'Hare at Briefing.com.

Comments on Tuesday by Fed Governor Christopher Waller, usually one of the more hawkish members, that interest rates don't need to be hiked further to bring inflation down to the central bank's two-percent target sparked a drop in the yields on US government bonds.

Many commercial interest rates are linked to the yield on US government debt, so the drop signals lower borrowing costs for businesses and consumers.

A string of indicators in recent weeks has suggested the US jobs market is softening and the economy slowing down -- but not quickly enough to cause much concern about a recession.

US third-quarter growth was revised up 5.2 percent in another sign the economy is weathering high interest rates.

That has encouraged investors to shift back into risk assets, though the latest advance has been tempered by profit-taking ahead of what many hope will be a "Santa rally".

Markets are now eyeing cuts to borrowing costs amid less rampant price increases, with billionaire investor Bill Ackman, founder of Pershing Square Capital Management, believing there could be a US rate reduction as early as the first quarter of next year.

Multiple interest rate hikes over the past two years aimed at cooling decades-high inflation have weighed heavily on the global economy.

The Organisation for Economic Co-operation and Development trimmed its forecast for global growth this year to 2.9 percent, and said it expects global output to slow next year to 2.7 percent.

- Key figures around 1630 GMT -

New York - Dow: UP less than 0.1 percent at 35,431.90 points

London - FTSE 100: DOWN 0.4 percent at 7,423.46 (close)

Paris - CAC 40: UP 0.2 percent at 7,267.64 (close)

Frankfurt - DAX: UP 1.1 percent at 16,166.45 (close)

EURO STOXX 50: UP 0.5 percent at 4,370.53 (close)

Tokyo - Nikkei 225: DOWN 0.3 percent at 33,321.22 (close)

Hong Kong - Hang Seng Index: DOWN 2.1 percent at 16,993.44 (close)

Shanghai - Composite: DOWN 0.6 percent at 3,021.69 (close)

Euro/dollar: DOWN at $1.0966 from $1.0994 on Tuesday

Pound/dollar: DOWN at $1.2675 from $1.2698

Dollar/yen: UP at 147.55 yen from 147.50 yen

Euro/pound: DOWN at 86.52 pence from 86.56 pence

West Texas Intermediate: UP 1.0 percent at $77.19 per barrel

Brent North Sea crude: UP 0.8 percent at $82.29 per barrel

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Nogueira--PC