Crude, equities advance on signs of recovery

LONDON: Oil prices rallied Tuesday as OPEC and its allies held an output meeting, while equity markets advanced despite concern that high inflation could prompt interest rate cuts and hamper economic recovery.

Eurozone inflation jumped to its highest level since October 2018 as Covid restrictions were scaled back across Europe, boosting the economy and stoking energy prices, official data showed.

Consumer prices in the 19 countries that use the euro rose by 2.0 percent year-on-year, slightly exceeding the target of the European Central Bank, the EU's Eurostat agency said.

"Most of the rise is due to temporary factors, including higher energy inflation, and we expect the headline rate to drop back to well below the ECB target next year," noted Andrew Kenningham, chief Europe economist at Capital Economics research group.

The euro gained against other major currencies, while eurozone stock markets rallied.

London stocks, resuming trade after a long holiday weekend in the UK, were also higher, with shares in heavyweight oil and mining groups in demand on rising commodity prices.

In New York, the Dow was higher in midday trading following a holiday weekend there as well.

Oil prices surged as ministers from OPEC and its allies looked set to keep boosting crude production on the basis that the world economy is well on the recovery track and demand will improve further.

Brent North Sea crude changed hands for $70.20 per barrel in afternoon trading.

Analysts expect more gains for global equities in the short term but warn the road will be bumpy as inflation spikes -- because of a strong recovery in activity, supply issues, bottlenecks and a low base of one-year comparison.

The rollout of vaccines around the world has allowed leaders of major economies including the United States and Europe to wind back the containment measures that sparked a recession last year.

That, combined with unprecedented government spending and central bank largesse, has been crucial to a rally in global equities from their March 2020 lows to record or multi-year highs.

Key figures around 1650 GMT -

Brent North Sea crude: UP 1.3 percent at $70.20 per barrel

West Texas Intermediate: UP 2.1 percent at $67.72 per barrel

New York - DOW: UP 0.4 percent at 34,661.25 points

EURO STOXX 50: UP 0.8 percent at 4,072.30

London - FTSE 100: UP 0.8 percent at 7,080.46 (close)

Frankfurt - DAX 30: UP 1.0 percent at 15,567.36 (close)

Paris - CAC 40: UP 0.7 percent at 6,489.40 (close)

Tokyo - Nikkei 225: DOWN 0.2 percent at 28,813.34 (close)

Hong Kong - Hang Seng Index: UP 1.1 percent at 29,468.00 (close)

Shanghai - Composite: UP 0.3 percent at 3,624.71 (close)

Pound/dollar: DOWN at $1.4177 from $1.4207 at 1645 GMT

Euro/dollar: UP at $1.2243 from $1.2227

Euro/pound: UP at 86.36 pence from 86.06 pence

Dollar/yen: DOWN at 109.41 yen from 109.46 yen