(Alliance News) - Stocks in London are set to open lower on Wednesday, after a hotter-than-expected US inflation report hit equities in New York overnight, with focus now turning to a consumer price index reading from the UK.

IG says futures indicate the FTSE 100 to open 9.9 points lower, 0.1%, at 7,502.38 on Wednesday. The index of London large-caps closed down 61.41 points, 0.8%, at 7,512.28.

Equities in New York suffered overnight. Both the Dow Jones Industrial Average and

S&P 500 shed 1.4%. The Nasdaq Composite plunged 1.8%.

In Tokyo, the Nikkei 225 fell 0.7% on Wednesday. Sydney's S&P/ASX 200 lost 0.7%. The Hang Seng shot up 0.9% as traders returned to desks in Hong Kong. Financial markets in Shanghai stay closed for the Chinese New Year holiday.

The US inflation rate cooled, but at a slower pace than expected last month, figures on Tuesday showed.

According to the Bureau of Labor Statistics, the nation's consumer price inflation rate eased to 3.1% in January, from 3.4% in December. It had been expected to ebb to 2.9%, according to FXStreet cited consensus, so the latest reading topped expectations.

Annual core inflation, so excluding food and energy, was steady at 3.9% in January, defying expectations of a slowdown to 3.7%.

Commerzbank analyst Ulrich Leuchtmann commented: "However, one swallow does not make inflation. If we look at just the core inflation data and smooth out the month-on-month rates, the picture that emerges is that inflation has been stagnant for some time.

"Without making any assumptions about inflation dynamics, yesterday's figure does not indicate a new acceleration in inflation dynamics, but merely a stagnation in the disinflation process. However, the smoothed month-on-month rates are stagnating at a level consistent with an annual rate of 3.7% or 3.8% — still far too high, even if one generously assumes that the [personal consumption expenditures] deflator (the Fed's measure of inflation) is rising much more slowly than the CPI."

Some of the dollar's momentum following the US inflation reading eased in early trade on Wednesday.

The pound was quoted at USD1.2608 early Wednesday, rising from USD1.2596 late Tuesday. The euro stood at USD1.0717, flat against USD1.0716. Against the yen, the dollar was trading at JPY150.48, down from JPY150.66.

Wednesday's economic calendar has a UK inflation reading at 0700 GMT, before eurozone gross domestic product data at 1000 GMT.

On the UK data, ING analysts said: "This may also show that progress on getting inflation lower has stalled."

The UK annual consumer price inflation rate is expected to have accelerated to 4.2% last month, from 4.0% in December, according to FXStreet cited consensus.

Bank of England Governor Andrew Bailey speaks at 1500 GMT.

Brent oil was quoted at USD82.57 a barrel early Wednesday, down from USD82.93 at the time of the European equities close on Tuesday.

Gold sank further below the USD2,000 an ounce mark, after Tuesday's US data supported the dollar. Gold was quoted at USD1,992.14 an ounce, down from USD1,995.88. The precious metal has an inverse relationship with the greenback.

In Wednesday's UK corporate calendar, there are full year results from soft drinks bottler Coca-Cola HBC. There are also trading statements from water utilities Severn Trent and United Utilities.

By Eric Cunha, Alliance News news editor

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