U.S. inflation data lifts euro stocks, bond

By Tom Burroughes

LONDON, July 16 (Reuters) - Moderate U.S. consumer price inflation boosted euro zone equities briefly and lifted demand for U.S. and European debt on Friday.

The dollar also weakened slightly after U.S. figures showed a headline rise of 0.3 percent in June, above market forecasts, while core CPI, which removes volatile energy and food costs, rose by a smaller-than-expected 0.1 percent.

Stock futures indicated a firmer open on Wall Street.

The U.S. data eased concerns that price figures could require aggressive rate rises by the Federal Reserve. Analysts said the data showed moderation of price pressures, which have been affected in recent months by strong oil prices.

"It still looks like energy costs were having an impact in June. But there's a good possibility that lower energy prices will trickle down to the consumer level later on," said Patrick Fearon, economist at A.G. Edwards & Sons in St Louis, Missouri.

The FTSE Eurotop 300 index of pan-European blue chips was rose by 0.56 percent, ticking higher immediately after the U.S. data. The narrower DJ Euro Stoxx 50 index rose by 0.58 percent on the day, adding to earlier gains.

In the debt market, the interest rate sensitive two-year Schatz yield (EU2YT=RR: Quote, Profile, Research) was down 2.2 basis points on the day at 2.614 percent. European interest rate futures rose after the U.S. data.

TECHNOLOGY LIFT

Earlier, technology stocks, which had been battered in recent sessions, had risen on sharp gains to Germany's Software AG (SOWG.DE: Quote, Profile, Research) after logging a 40 percent rise in second-quarter operating income.

In the previous U.S. and Asian sessions, technology giant International Business Machines (IBM.N: Quote, Profile, Research) and Samsung Electronics (005930.KS: Quote, Profile, Research) logged robust earning results, helping to bolster stock prices.

In Tokyo, the Nikkei average added 0.24 percent to 11,436.00 after earlier slipping as low as 11,243.28, its lowest intraday level since June 7.

The broader TOPIX index ended up 0.04 percent at 1,151.16.

Among government bond indices, the benchmark 10-year Bund yield (EU10YT=RR: Quote, Profile, Research) was at 4.258 percent, virtually flat on the day.

The dollar slipped against the euro, down under a quarter of a percent on the day at $1.2386 (EUR=: Quote, Profile, Research) , while it was down about half a percent against the yen at 109.11 yen (JPY=: Quote, Profile, Research) .

In the oil market, front-month August Brent was up 37 cents a barrel at $37.85 (LCOc1: Quote, Profile, Research) .

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