Slight rise in world equity market on tame U.S. inflation

A gauge of world equity markets rose and the dollar eased on Tuesday after a tame reading on U.S. inflation reinforced expectations the Federal Reserve will not raise interest rates anytime soon, while Boeing shares slid for a second day. U.S. consumer prices rose for the first time in four months in February but the modest pace of the increase resulted in the smallest annual gain in inflation in nearly 2-1/2 years.

In the 12 months through February, the CPI rose 1.5 per cent, well under the Fed's target of 2 per cent, leading the dollar to slip against the euro and the dollar index of leading U.S. trading partners to fall. Gold gained on the weaker greenback. "The takeaway from the data was that inflation is in check and that would allow the Fed to remain patient and that is always good for equities," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance in Charlotte, North Carolina.

Boeing Co slumped 6.13 per cent to extend Monday's losses as more countries, including all of the European Union, grounded the company's 737 MAX planes following a second fatal crash in five months. Rival aeroplane manufacturer Airbus SE was the biggest contributor to advancing shares in the FTSEurofirst 300 of leading European shares, rising 1.43 per cent, but the index edged lower in choppy trade as investors awaited a Brexit vote.

British Prime Minister Theresa May headed for defeat on her plans to leave the EU as sceptical members of her Conservative Party appeared ready to defy her warning that Britain might not leave the bloc at all if they voted against her. Sterling fell 0.63 per cent to $1.3068.

MSCI's all-country world index of equity performance in 47 countries rose 0.61 per cent, while the pan-European STOXX 600 index lost 0.06 per cent. On Wall Street, the S&P 500 gained 12.98 points, or 0.47 per cent, to 2,796.28 and the Nasdaq Composite added 47.61 points, or 0.63 per cent, to 7,605.67.

The Dow Jones Industrial Average fell 46.51 points, or 0.18 per cent, to 25,604.37, dragged lower by slumping Boeing. The Mexican peso and Canadian dollar gained on the tame U.S. inflation data as the dollar index fell 0.3 per cent and the Japanese yen weakened 0.04 per cent versus the greenback at 111.29 per dollar.

The euro gained 0.44 per cent to $1.1297. U.S. Treasury yields drifted lower after the inflation data.

U.S. long-dated yields have fallen in six of the last seven sessions, while those on two-year notes, the security most sensitive to interest rate moves, dropped in five of the last seven. Benchmark 10-year U.S. Treasury notes rose 11/32 in price to push the yield down to 2.6015 per cent.

Oil prices rose, supported by signs of tightening global supply after a Saudi official said the kingdom plans to cut oil exports in April, while a power outage in Venezuela reduced its crude exports. Brent crude futures settled up 9 cents at $66.67 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 8 cents to settle at $56.87 a barrel.

U.S. gold futures settled 0.5 per cent higher at $1,297.70.