GLOBAL MARKETS – Stocks fell on higher British inflation and New Zealand rate hike

By Danilo Massoni

Aug 17 (Reuters) – Global stocks and oil prices fell on Wednesday as UK inflation – which hit its highest level since 1982 – and rising interest rates in New Zealand reminded investors of the challenges facing the global economy.

* MSCI’s benchmark index of global shares was trading nearly flat from its opening peak at 1055 GMT, signaling the recovery that began in July has run out of steam.

* European shares fell 0.3%, while MSCI’s index of Asia-Pacific shares excluding Japan added 0.1%.

* Wall Street appeared to be heading for a weaker start, with S&P 500 futures down 0.7% on Tuesday after strong gains followed better-than-expected results from Walmart and Home Depot that bolstered confidence in consumer health.

* However, a larger-than-expected rise in UK consumer prices, to 10.1% in July, highlighted growing pressures on households and helped consolidate expectations that interest rates will rise further. .

* Sterling pared some gains and traded flat against the dollar after an early round of data.

* Two-year UK bond yields, which are sensitive to expectations of rate rises, rose to their highest levels above nearly 14-year and 10-year yields, signaling an inversion of the yield curve that many investors see as a key precursor. Economic recession.

* New Zealand shares closed flat. After the early rally, the New Zealand dollar turned negative after the local central bank announced a fourth consecutive interest rate hike of 50 basis points.

* In currency markets, the dollar index rose 0.1% to 106.59, ahead of the release of the latest Federal Reserve meeting minutes, which investors will examine for further clues about its future. Opportunities to tighten monetary policy.

* In Europe, yields rose as UK inflation data refocused investors’ attention on potential monetary tightening in the euro zone. Two-year German bond yields rose 13 basis points to 0.714%, the highest since July 21.

* The yield on US 10-year Treasury notes rose 4 basis points to 2.865%.

* Oil hit a six-month low after rallying briefly as worries about the prospect of a global recession faded, overshadowing a report showing a decline in U.S. crude and gasoline stocks.

* Brent crude was down 0.4% at $92 a barrel, while US West Texas Intermediate crude was down 0.1% at $86.4.

* Spot gold was down 0.3% at $1,771 an ounce, trading in a narrow range.

(Reporting by Danilo Massoni and Sam Byford in Tokyo; Editing in Spanish by Ricardo Figueroa)