European markets closed higher Monday after a weekend of strong economic data from China but ahead of fresh inflation readings, with Paris setting new records while US equities fell back and oil prices fell.
France's CAC 40 index reached new all-time and closing highs, topping out at 7,136.13 points intraday before closing slightly lower, thanks to a strong earnings season and continued central bank support to eurozone economies through rising inflation.
"In this environment, shares remain a profitable asset for investors" given historic-low real interest rates (accounting for inflation), said Florence Barjou of Lyxor AM.
The picture was less exuberant in London and Frankfurt, although both were still in the green, while across the Atlantic the Dow Jones Industrial Average, S&P 500 and tech-heavy Nasdaq all fell.
US inflation is tracking higher and earnings from major retailers should give a reading on the motor of the world's largest economy later in the week.
"Given the surge in inflationary pressures and the drop in consumer sentiment, there is greater risk of a negative surprise than a positive one," ThinkMarkets analyst Fawad Razaqzada said.
The fall in US equities came despite extra encouragement from a boosted November manufacturing survey from the New York Fed, as well as strong retail and industrial data from China.
Asian equity markets had mostly enjoyed gains Monday after another healthy pre-weekend showing on Wall Street.
US President Joe Biden and China's Xi Jinping meanwhile speak Monday at a virtual summit aimed at defusing some of the tensions that have built up over Taiwan and other flashpoint issues, but with both sides signalling little appetite for compromise.
But inflation remains in the spotlight as financial players await price growth updates this week from the eurozone and UK after soaring numbers out of the US and China.
"Higher inflation data... coupled with the festering global supply chain challenges have fostered some of the recent market volatility, and uncertainty regarding the path of monetary policies," Charles Schwab analysts wrote.
While optimism about the global economic recovery remains intact, the rise in prices at rates not seen for decades has traders increasingly worried that central banks will have to tighten monetary policy quicker and more sharply than previously thought.
Data out of the United States last week showing consumer sentiment at a 10-year low indicated that the issue is being felt more in people's pockets, putting pressure on the Federal Reserve to step in.
However, for now officials are sticking to their view that the inflation spike will be temporary and peter out as supply chain problems are resolved.
Investors will be keeping an eye on a planned virtual summit between Xi Jinping and Joe Biden, with relations between the superpowers strained by a range of issues including Taiwan and trade Photo: AFP / NICOLAS ASFOURI
Tokyo's stock market enjoyed a strong showing Monday, shrugging off news that the Japanese economy contracted more than forecast in the third quarter.
A new stock exchange focused on smaller-scale firms meanwhile began trading in Beijing on Monday, as China cracks down on domestic tech giants.
New York - Dow: FLAT at 36,109.70 points
London - FTSE 100: UP 0.1 percent at 7,351.86 (close)
Frankfurt - DAX: UP 0.3 percent at 16,148.64 (close)
Paris - CAC 40: UP 0.5 percent at 7,128.63 (close)
EURO STOXX 50: UP 0.4 percent at 4,386.19
Tokyo - Nikkei 225: UP 0.6 percent at 29,776.80 (close)
Hong Kong - Hang Seng Index: UP 0.3 percent at 25,390.91 (close)
Shanghai - Composite: DOWN 0.2 percent at 3,533.30 (close)
Euro/dollar: DOWN at $1.1417 from $1.1445 on Friday
Pound/dollar: UP at $1.3442 from $1.3413
Euro/pound: DOWN at 84.94 pence from 85.33 pence
Brent North Sea crude: DOWN 1.3 percent at $81.12 per barrel
West Texas Intermediate: DOWN 1.2 percent at $79.80 per barrel
