GLOBAL MARKETS - World Shares Flattened by Stubborn Inflation and Slow China Growth

GLOBAL MARKET - LONDON Feb 19 (Reuters) - World shares struggled to climb on Monday after the chances of early interest rate cuts globally receded and Chinese markets recorded modest gains on their return from the lunar new year break.

A holiday for U.S. markets made for thin trading, and results from AI star NvidiaNVDA.O on Wednesday could challenge the latest surge in tech stocks.

MSCI's broadest index of world shares .MIWD00000PUS and Europe's broader index of stocks .STOXX both traded around 0.05% as of 13:53 GMT.

"The mixed economic data released lately has put us in a transition period and we are waiting for the data to tell a consistent story," James Rossiter, head of global macro strategy at TD Securities, said.

Read Also: Stock Recommendations: Astra International's Performance is Predicted to Grow

A red-hot U.S. CPI print on Tuesday followed by another upside surprise in producer prices on Friday left investors anxious inflation will persist. A weaker retail sales report, suggesting slower economic momentum augmented their concerns.

However, U.S. labour market numbers have continued to show plentiful jobs and elevated wage growth.

In Asia, Japan's Nikkei .N225 ended flat on Monday, pressured by chip-related shares following a slump in their U.S. counterparts late last week..T

Chinese blue chips .CSI300 finished up just over 1%, after tourism revenues during the Lunar New Year holiday surged by 47% compared with a year earlier as more than 61 million rail trips were taken.

Read Also: Sariguna Primatirta (CLEO) Prepares Capex of IDR 300 Billion, for What Purposes?

The country's central bank skipped another chance to cut rates on Sunday, limiting downward pressure on the yuan, but as deflation looms, analysts see scope for further policy stimulus.

The same cannot be said for the United States as high readings on producer and consumer prices led markets to scale back pricing for rate cuts.

"The risk to the rally is a stronger pick-up in inflation leading to higher yields," said Alain Bokobza head of global asset allocation in a Societe Generale note.

Non-recessionary rate cuts pushing up yields and a slowing of Nasdaq growth might drive volatility, which the note said was likely in the second half of this year.

Futures 0#FF: dropped, implying a 28% chance rates will be cut in May.

HANGING ON NVIDIA

The surprise on inflation means the minutes of the Fed's last policy meeting out this week will look dated, but any talk about the timing of potential cuts will be noted.

There are plenty of Fed speakers out this week to comment on the outlook, with Fed Vice Chair Philip Jefferson and Governor Christopher Waller of particular interest.

The market sea change on rates saw two-year Treasury yields US2YT=RR spike to a 2024 high of 4.72% on Friday before steadying at 4.64%. Treasury futures TYc1 were little changed on Monday with the cash market closed.

Read Also: Wijaya Karya Gedung (WEGE) Targets New Contracts Worth IDR 5.07 Trillion in 2024

S&P 500 futures ESc1 ticked up by 0.1%, while Nasdaq futures NQc1 added 0.21%, helped by hopes Nvidia could somehow beat already stratospheric expectations.

The chipmaker's stock has surged 46% so far this year and accounted for more than a quarter of the S&P 500's gains. There is reason for optimism given that of the 80% of S&P 500 reporting so far, 75% have beaten forecasts.

Higher bond yields underpinned the dollar at 149.99 yen JPY=EBS, though the possibility of Bank of Japan intervention to prop up the yen has so far capped the currency pair at 150.88.

The dollar index was a touch firmer, while the euro was tipped lower on the day at around $1.0770 EUR=EBS, =USD.

The rise in yields did not prevent non-yielding gold firming 0.2% to around $2,015 an ounce XAU=. GOL/

Read Also: Cisadane Sawit (CSRA) Allocates IDR 390 Billion Loan Funds for Working Capital

Oil prices eased as doubts about demand tussled with the threat of supply disruptions in the Middle East. O/R

Brent LCOc1 slipped 12 cents to $83.35 a barrel, while U.S. crude CLc1 for April rose 11 cents to $79.30 per barrel.

By Nell Mackenzie

(Reporting by Nell Mackenzie; Editing by Dhara Ranasinghe, Sam Holmes, Shri Navaratnam, Susan Fenton and Barbara Lewis)