Frankfurt's benchmark DAX index and the Paris CAC 40 scaled the latest pinnacles also despite rising Covid-19 infections in much of Europe.

The European single currency held firm after tanking on Wednesday to $1.1264 -- the lowest level since July 2020.

Oil prices briefly touched one-month lows Thursday on lower demand concerns.

"The DAX and CAC are being supported by the receding likelihood of a European Central Bank (ECB) rate hike next year, which is also dragging on the euro," said CMC Markets analyst Michael Hewson.

IG analyst Joshua Mahony added that "fears of a resurgence in Covid cases in mainland Europe have done little to perturb investors" in the region.

A weaker euro tends to lift eurozone stocks because it makes its exports cheaper for buyers using stronger currencies.

ECB president Christine Lagarde this week said the bank did not expect to raise interest rates next year, in contrast to much sooner tightening expected by the Bank of England and the US Federal Reserve.

Stubborn fears over runaway global inflation continue to stalk trading floors.

But while eurozone inflation will hit a record high in November it is expected to decline over the course of next year, a senior ECB policymaker predicted Wednesday.

Asian bourses fell Thursday, tracking losses on Wall Street Wednesday fuelled also by talk that some central banks will have to tighten their monetary policies quicker than anticipated.

Data out Wednesday showed inflation close to a decade-high in Britain and an 18-year peak in Canada.

That came one week after news that US inflation surged to the highest level since 1990.

European stocks extend record rally

Investors are fearful that massive financial stimulus -- coupled with resurgent post-lockdown demand and supply-chain snarl-ups -- could send consumer prices rocketing even further.

Key figures around 1200 GMT

London - FTSE 100: DOWN 0.2 percent at 7,277.83 points

Frankfurt - DAX: UP 0.1 percent at 16,263.98

Paris - CAC 40: UP 0.2 percent at 7,169.16

EURO STOXX 50: UP 0.1 percent at 4,403.49

Tokyo - Nikkei 225: DOWN 0.3 percent at 29,598.66 (close)

Hong Kong - Hang Seng Index: DOWN 1.3 percent at 25,319.72 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,520.71 (close)

New York - Dow: DOWN 0.6 percent at 35,931.05 (close)

Euro/dollar: UP at $1.1348 from $1.1319 at 2200 GMT

Pound/dollar: UP at $1.3493 from $1.3487

Euro/pound: UP at 84.08 pence from 83.93 pence

Dollar/yen: UP at 114.18 yen from 114.08 yen

Brent North Sea crude: DOWN 0.2 percent at $80.14 per barrel

West Texas Intermediate: DOWN 0.3 percent at $78.05 per barrel

The Frankfurt and Paris stock markets nudged higher in early afternoon eurozone trading, aided by the weaker euro as dealers braced for tighter monetary policy in Britain and the United States while the ECB sits tight.

London's FTSE 100 index fell however, as data showed UK annual inflation spiked to a near decade-high in October on higher energy bills.

The news sent the pound jumping as traders priced in a December interest rate hike from the Bank of England, emboldened also by Tuesday's upbeat UK jobless data.

"It is a mixed picture for European markets with the FTSE 100 under pressure... following a spike in the pound against the euro on the back of hot UK inflation figures," said Interactive Investor analyst Victoria Scholar.

"Travel and leisure is at the bottom... amid concerns about rising Covid cases while banks and basic resources are outperforming."

Inflation continues to fuel expectations that global central banks will be forced to tighten monetary policy quicker than expected.

New York's three main indices rose again Tuesday after data showed a forecast-busting rise in retail sales as well as solid earnings from shopping giants Walmart and Home Depot.

The news reinforced optimism about the recovery in the world's top economy and showed consumers were brushing off the effects of surging inflation, for now.

However, it also provided more support to calls for the Federal Reserve to act sooner to prevent overheating and make sure prices do not run out of control.

Top Fed official James Bullard said the bank should take a "more hawkish" shift and that the tapering of its vast bond-buying programme -- which has helped support an extended global equity rally -- "could move faster".

In Asia, Hong Kong retreated for the first time after a six-day run-up, while Tokyo, Sydney, Seoul, Singapore, Mumbai, Manila and Wellington also fell.

However, Shanghai and Taipei reversed early losses while there were mild gains in Bangkok and Jakarta.

Asian markets down as US data strengthen call for Fed action

Oil prices sank as traders digested rising US crude reserves, indicating weaker demand in the world's top crude consumer.

Key figures around 1200 GMT

London - FTSE 100: DOWN 0.2 percent at 7,310.58 points

Frankfurt - DAX: UP 0.1 percent at 16,269.01

Paris - CAC 40: UP 0.1 percent at 7,161.49

EURO STOXX 50: UP 0.1 percent at 4,404.98

Tokyo - Nikkei 225: DOWN 0.4 percent at 29,688.33 (close)

Hong Kong - Hang Seng Index: DOWN 0.3 percent at 25,650.08 (close)

Shanghai - Composite: UP 0.4 percent at 3,537.37 (close)

New York - Dow: UP 0.2 percent to 36,142.22 (close)

Euro/dollar: UP at $1.1334 from $1.1320 at 2200 GMT

Pound/dollar: UP at $1.3469 from $1.3430

Euro/pound: DOWN at 84.12 pence from 84.29 pence

Dollar/yen: DOWN at 114.63 yen from 114.82 yen

Brent North Sea crude: DOWN 0.4 percent at $82.07 per barrel

West Texas Intermediate: DOWN 0.6 percent at $80.31 per barrel

The closely watched conversation between the leaders of the world's biggest economies appeared to yield no immediate outcome but is widely seen as a joint effort to improve icy relations and avoid direct confrontation.

"Markets are trading north courtesy of the Biden-Xi virtual summit which seems to have somewhat defused U.S.-China tensions," said Stephane Ekolo, global equity strategist at Tradition in London.

"Market participants view such a summit as a positive effort to stabilise a tense relationship, fuelling risk-on mode appetite," he added.

The pan-European STOXX 600, German blue chips and the Paris CAC 40 benchmark all hit new record highs in morning trading, rising between 0.4 and 0.5%.

Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3% to its highest level since Oct. 27.

Wall Street futures ticked up and MSCI's world stock index hovered in striking distance of last week's historic peaks.

While some investors are becoming wary of buying into record-breaking equity markets, many analysts believe there is some upside left.

"We believe that markets will continue to be supported by earnings growth in 2022, albeit at a slower pace", wrote chief market strategist Julien Lafargue in Barclays Private Bank's outlook into 2022.

The dollar index was flat but holding on to levels not seen since July 2020 while the euro, by contrast, was trading at prices last hit 16 months ago with a fresh low of $1.1352.

Rising cases of COVID-19 infections are weighing on the euro as some countries, such as Austria and the Netherlands, have implemented new social restrictions to curb the spread of the disease.

Oil stocks power Europe's STOXX 600 to record highs

Another factor playing against the common currency was European Central Bank President Christine Lagarde pushing back on Monday against bets for tighter monetary policy, saying doing so now could choke off the euro zone's recovery.

The yield of the benchmark German 10-year government bond was flat at -0.244%, while the 10-year U.S. Treasury yields was also little changed at 1.6129%, still a substantial jump since the one-month low of 1.42% hit one week ago.

Traders were waiting for U.S. retail sales, trade prices and industrial production data for October to get another insight about the health of the world's biggest economy.

Oil rebounded from a weak start with Brent futures adding 0.65% at $82.58 a barrel.

Spot gold rose 0.53% at $1,872 an ounce and reached a fresh five month high.

The blue-chip FTSE 100 index was down 0.2% in morning trade, with companies that have large overseas exposure including British American Tobacco, Reckitt Benckiser and Unilever falling between 0.4% and 0.9%.

A sizeable chunk of FTSE 100's constituents earn revenue in dollars, putting them under pressure from a stronger domestic currency.

The pound rose as data showed British employers added 160,000 workers to their payrolls in October, the first month after the end of UK's furlough scheme, cementing expectations of an interest rate hike in December.

Bank of England Governor Andrew Bailey said on Monday he was "very uneasy" about the inflation outlook. Investors will remain focussed on consumer prices data on Wednesday.

Financial markets have currently priced in a near 100% chance that the BoE raise rates to 0.25% from 0.1% in December.

"While the MPC will likely continue to preach the transitory nature of current price rises, tomorrow's release will make an uncomfortable reading," said Stuart Cole, economist at Equiti Capital.

"Taken in conjunction with today's strong employment data, a release in line with expectations tomorrow will see market sentiment firm towards a rate rise in December."

London's FTSE 100 edges lower as miners offset Shell gains

Vodafone jumped 5.2% after raising its forecast for this year's free cash flow and reporting a 6.5% growth in adjusted core earnings in the first half.

Johnnie Walker whisky maker Diageo added 2.3% after setting higher medium-term growth targets.

Tobacco group Imperial Brands fell 1.5% after reporting a decline in volumes despite a slight uptick in its full-year sales.

The domestically focussed mid-cap index also fell 0.2%.

UK's largest commercial property firm Land Securities Group added 2.7% after swinging to a half-year profit, as it recovers from the pandemic which battered its key Central London-focused office portfoli

The continent-wide STOXX 600 index rose 0.1% to an all-time high, although a 1.1% drop in miners capped gains as metal prices tumbled on China's pledge to "phase down" coal at the COP26 summit.

Data earlier in the day showed retail sales and industrial output growth last month in the world's second-largest economy beat expectations, fuelling global investor optimism.

The STOXX 600 has hit a series of record highs this month as strong corporate earnings and dovish central bank policy decisions lifted investor confidence, helping take the focus off a COVID-19 resurgence in the region.

"The peaks we're seeing are driven by the expected spending spree ahead of the Christmas festivities, with continuous improvement in business operations likely to boost prospects for European markets," said Kunal Sawhney, CEO of Kalkine Group.

"Any major obstruction in business activity on the back of COVID-19, repeated shutdowns, store closures and difficulties in operations will potentially retrace the months-long upsurge in indices."

The Austrian government on Sunday became the first European country to reinstate a fresh lockdown, placing millions of unvaccinated people under restrictions amid record-level infection rates.

European stocks kick off November with fresh highs

France's blue-chip CAC 40 hit a record high, rising 2.1% on a lift from Airbus. The European planemaker received a multi-billion-dollar order for 255 single-aisle A321neo passenger jets from private-equity firm Indigo Partners' portfolio airlines.

Royal Dutch Shell added 2% after saying it would simplify its business and move its head office to Britain from the Netherlands. The stock was the top performer among oil stocks, which advanced 0.4%.

Meanwhile, Spanish Bank BBVA was the biggest drag on Spain's blue-chip IBEX, losing 3.7% on its offer to buy the rest of Garanti BBVA for up to 2.25 billion euros ($2.6 billion).

Shares of Philips, which is recalling ventilators due to use of parts containing a potentially hazardous foam, slid 10.9% after the company announced it was in talks with U.S. regulators following a new inspection of one of its facilities.

The blue-chip FTSE 100 was down 0.1% in early morning trade.

Shell added 2.2% after the energy giant said it will scrap its dual share system in favour of a single class of shares to boost shareholder payouts and simplify its structure.

"This means you've got more simplification in terms of tax, dividends, share buybacks and it just makes it easier for the company to operate," said Andrew Jones, portfolio manager at Janus Henderson Investors.

"Shell has become more shareholder friendly, more akin to most companies with a single share structure and the markets often take that quite well"

However, miners Anglo American, Glencore and BHP Group declined between 1.1% and 1.6%, after U.N. climate talks ended Saturday with a deal that for the first time targeted fossil fuels as the key driver of global warming.

Data showed crude steel output in China, the world's top producer of the metal, fell for the fifth straight month in October amid curbs.

FTSE 100 inches

Inflationary pressures and supply chain problems have weighed on UK's economic recovery, with FTSE 100 gaining 13.9% this year and underperforming its peers in Europe and the United States.

The Bank of England is expected to be the first major central bank to raise interest rates after the pandemic, but whether that initial increase comes as soon as next month or it waits until early next year has divided economists polled by Reuters.

Markets focus on key economic data this week for more clues on what will sway the BoE decision in December, with UK reporting employment data on Tuesday, October CPI and retail sales figures later in the week.

The domestically focussed mid-cap index advanced 0.4%, with online trading group CMC Markets among the top gainers, adding 9.5% after announcing a possible separation of its leveraged and non-leveraged divisions.

Cineworld jumped 15.0% after reporting an improvement in October box office revenue as COVID-19 restrictions eased.

After some market players had been betting on an interest rate hike by the BoE, the pound fell sharply against the dollar when the British central bank announced it would be leaving borrowing costs at the current low of 0.1 percent for the time being.

The decision "will come as a surprise to some in markets," said Berenberg economist Kallum Pickering.

But it was "the correct decision," the expert said. "By keeping rates on hold, the BoE will force markets to reconsider the likely path of rates over the coming years."

Stock prices in London continued to rise after the announcement, and the markets in Frankfurt and Paris were similarly in positive territory.

On the other side of the Atlantic, Wall Street opened fractionally lower after reaching record highs the previous day.

Oil rebounded from recent losses as traders awaited a decision by OPEC and other key producers to open up the pumps to rein in runaway energy prices.

Even if BoE governor Andrew Bailey wrongfooted some market players on rates, the central bank said it would "likely be necessary" to have "some modest tightening of monetary policy" to bring down inflation.

Policymakers "judged that... it would be necessary over coming months to increase" the main rate to bring UK annual inflation back down to the central bank's target of 2.0 percent, the statement said.

However, CMC Markets analyst Michael Hewson said the decision was "a huge own goal for the central bank, already widely distrusted by the markets due to the unreliable boyfriend era of Mark Carney."

The new BoE chief "had the opportunity to reset the narrative when he took over and restore the central banks credibility, and he's completely bodged it," the expert said.

"The least markets can ask for is a central bank that is disciplined on messaging, and this fiasco has shown the bank's faults when it comes to forward guidance are still there in plain sight."

In the US, the Fed on Wednesday said it would start reducing the monthly pace of quantitative easing stimulus purchases by $10 billion for Treasuries and $5 billion for mortgage-backed securities.

The announcement fuelled another record rally on Wall Street, and bumper gains across Asia.

European stocks inch up

The US central bank added it would be patient in hiking interest rates as the world's biggest economy continues to recover, insisting once more that surging inflation was transitory.

The announcement brought to an end months of speculation about the Fed's plan for the bond-buying programme, and removed some unease among traders who were concerned that officials were leaving it too late to respond to rocketing inflation.

The move makes the Fed the latest monetary authority -- after central banks in Canada and South Korea -- to begin winding back the measures put in place at the start of the pandemic which have been crucial to the global rebound and an 18-month equity rally to multi-year or record highs.

At the same time, supply bottlenecks and shortages have caused global consumer prices to rise, prompting criticism that the Fed and other central banks have become overly complacent about inflation risks.

Key figures around 1345 GMT

New York - Dow: DOWN 0.1 percent at 36,121.39 points

London - FTSE 100: UP 0.4 percent at 7,281.42

Frankfurt - DAX: UP 0.5 percent at 16,041.97

Paris - CAC 40: UP 0.5 percent at 6,982.86

EURO STOXX 50: UP 0.5 percent at 4,332.91

Tokyo - Nikkei 225: UP 0.9 percent at 29,794.37 (close)

Hong Kong - Hang Seng Index: UP 0.8 percent at 25,225.19 (close)

Shanghai - Composite: UP 0.8 percent at 3,526.87 (close)

Euro/dollar: DOWN at $1.1562 from $1.1612 at 2100 GMT Wednesday

Dollar/yen: DOWN at 113.84 from 114.01 yen

Pound/dollar: DOWN at $1.3539 from $1.3687

Euro/pound: UP at 85.39 pence from 84.83 pence

Brent North Sea crude: UP 2.7 percent at $84.23 per barrel

West Texas Intermediate: UP 2.8 percent at $83.09 per barrel

London equities also pushed ahead before an interest rate decision from the Bank of England at 1200 GMT, with economists predicting a close call over a possible hike to borrowing costs despite soaring inflation.

The dollar traded mixed while the pound wavered.

Oil rebounded from recent losses, with traders awaiting an output gathering of OPEC and other key producers.

The Fed on Wednesday said it would start reducing the monthly pace of quantitative easing (QE) stimulus purchases by $10 billion for Treasuries and $5 billion for mortgage-backed securities.

The announcement fuelled another record rally on Wall Street, and bumper gains across Asia.

The US central bank added it would be patient in hiking interest rates as the world's biggest economy continues to recover, insisting once more that surging inflation was transitory.

"This QE tapering has been very well communicated and surprised no one," SEB chief economist Jens Magnusson told AFP.

"There was a fear that the $15 billion decrease per month could have been $20 billion or $25 billion, and there was also a risk of a more hawkish rate message.

"As it turned out, everything was in line with expectations with no scary surprises and sometimes that's all it takes for stock markets to be happy."

The announcement brought to an end months of speculation about the bank's plan for the bond-buying programme, and removed some unease among traders who were concerned that officials were leaving it too late to respond to rocketing inflation.

The Fed is the latest bank to move away from its emergency measures and it comes after rate hikes in several countries including Canada and South Korea.

It also makes the Fed the latest monetary authority to begin winding back the measures put in place at the start of the pandemic which have been crucial to the global rebound and an 18-month equity rally to multi-year or record highs.

At the same time, supply bottlenecks and shortages have caused global consumer prices to rise, prompting criticism that the Fed and other central banks have become overly complacent about inflation risks.

The Bank of England will meanwhile reveal its latest rate decision at midday on Thursday, amid talk of a rate hike to dampen soaring inflation, and it could also taper its stimulus.

Banks power European stocks to record highs

The bank may hike borrowing costs from a record-low 0.1 percent to 0.25 percent as the UK annual inflation rate looks set to reach more than double its target in the coming months.

"Whether today or next month, the BoE is about to embark on a tightening cycle to combat high inflation," Oanda analyst Craig Erlam told AFP.

"But they're not alone. Central banks around the world are taking a similar approach, withdrawing emergency pandemic measures and turning their attention to inflation which has already proven itself to be a bigger, less temporary problem than they all assumed."

Key figures around 1100 GMT

London - FTSE 100: UP 0.2 percent at 7,265.88 points

Frankfurt - DAX: UP 0.4 percent at 16,022.86

Paris - CAC 40: UP 0.4 percent at 6,974.64

EURO STOXX 50: UP 0.4 percent at 4,326.87

Tokyo - Nikkei 225: UP 0.9 percent at 29,794.37 (close)

Hong Kong - Hang Seng Index: UP 0.8 percent at 25,225.19 (close)

Shanghai - Composite: UP 0.8 percent at 3,526.87 (close)

New York - Dow: UP 0.3 percent at 36,157.58 (close)

Euro/dollar: DOWN at $1.1547 from $1.1612 at 2100 GMT Wednesday

Dollar/yen: DOWN at 113.94 from 114.01 yen

Pound/dollar: DOWN at $1.3629 from $1.3687

Euro/pound: DOWN at 84.71 pence from 84.83 pence

Brent North Sea crude: UP 1.8 percent at $83.43 per barrel

West Texas Intermediate: UP 1.5 percent at $82.06 per barrel

World oil prices sank as concerns about China tempered demand expectations.

"If there is no sign of stress across... markets, it's mostly because we all think we know what will come out from today's (Fed) meeting: a gradual start of the tapering of the bond purchases programme," said SwissQuote analyst Ipek Ozkardeskaya.

A third straight day of record highs for Wall Street's three main indices Tuesday provided little inspiration in the face of long-running fears about surging inflation and the prospect of higher interest rates.

With prices rising at rates not seen for years, central banks are being forced to row back the vast financial support put in place at the start of the pandemic, which has been credited with sending equities to records and helping the economic recovery.

The Bank of England is expected Thursday to raise its interest rate for the first time in more than three years to help combat soaring inflation.

Other central banks have already lifted borrowing costs or started to tighten the purse strings.

But the European Central Bank is "very unlikely" to raise its interest rates even in 2022, president Christine Lagarde said Wednesday.

"Despite the current inflation surge, the outlook for inflation over the medium term remains subdued," Lagarde said in a speech in Lisbon.

In Asia, Hong Kong and Shanghai stock markets were dented again by concerns about China's economy as leaders struggle to contain a new wave of Covid infections.

Hong Kong and Shanghai slipped, with the latest Covid spike in several parts of China forcing some cities into fresh lockdowns that have led to worries about the impact on already strained supply chains in the world's number two economy.

Asian markets mixed ahead of Fed as China concerns weigh

Stresses in the country were highlighted Monday when the government urged people to stock up on daily necessities and said authorities should take steps to ensure adequate food supplies as containment measures were introduced.

A summer outbreak has been blamed for dragging on growth in the third quarter and the closing of factories again will further flame fears about the recovery outlook.

Key figures around 1100 GMT

London - FTSE 100: DOWN 0.3 percent at 7,251.28 points

Frankfurt - DAX: UP 0.1 percent at 15,971.46

Paris - CAC 40: UP 0.2 percent at 6,942.33

EURO STOXX 50: UP 0.2 percent at 4,304.89

Hong Kong - Hang Seng Index: DOWN 0.3 percent at 25,024.75 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,498.54 (close)

Tokyo - Nikkei 225: Closed for a holiday

New York - Dow: UP 0.4 percent at 36,052.63 (close)

Euro/dollar: UP at $1.1592 from $1.1579 at 2100 GMT Tuesday

Dollar/yen: DOWN at 113.77 from 113.96 yen

Pound/dollar: UP at $1.3652 from $1.3612

Euro/pound: DOWN at 84.87 pence from 85.06 pence

Brent North Sea crude: DOWN 1.9 percent at $83.09 per barrel

West Texas Intermediate: DOWN 2.2 percent at $82.03 per barrel