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* U.S. inflation shock eases, helping stocks to steady
* Dollar highest since July 2020 pressures crude oil
* Richemont leads surge in luxury stocks
* STOXX index, Paris blue chips hit record highs
* Short-dated U.S. Treasury yields edge higher
By Huw Jones
LONDON, Nov 12 (Reuters) - European shares chalked up new
highs on Friday as shock from unexpectedly strong U.S. inflation
data earlier in the week eased, though investors kept a wary eye
on rising yields as the dollar hit a 16-month high.
The STOXX index of 600 companies was up 0.09%,
enough to eke out a new record high for a second day running.
The CAC 40 French blue chip index in Paris also clocked
up a new high.
Sentiment was helped by strong earnings from Cartier-owned
Richemont and Deutsche Telekom, though
Anglo-Swedish drugmaker AstraZeneca fell after a profit
miss.
The MSCI All Country stock index was up
0.12% at 752.94 points, holding steady after Wednesday's drop in
the wake of data showing U.S. inflation at its highest in three
decades. The index is barely 6 points below Tuesday's record
high.
U.S. bond markets reopen on Friday after closing on Thursday
for Veterans Day.
"What we want to see today is whether or not the drop in
bonds and rise in yields that started to play out on Wednesday
after the inflation data continues today," said Mike Hewson,
chief markets analyst at CMC Markets.
"Directionally, the line of least resistance is for lower
bond prices and higher yields and the stock market does not seem
to care that much."
The world's stock prices posted their biggest fall in over a
month on Wednesday on data showing that the U.S. consumer price
index rose 6.2% year-on-year in October, the strongest advance
since November 1990.
Bond yields ticked up on Friday, with the 10-year U.S.
Treasuries yield at 1.572%.
"Inflation is obviously a risk to watch. But stock prices
will face a major crash only if the Federal Reserve turns out to
be completely wrong in its assessment and is forced to raise
interest rates rapidly. That's not where we are now," said
Norihiro Fujito, chief investment strategist at Mitsubishi UFJ
Morgan Stanley Securities.
While the inflation data suggested that the current wave of
price spikes due to chronic worldwide supply constraints could
have more staying power than many had hoped, many investors
still think inflationary pressure will eventually ease.
"If we get over the year-end holiday shopping season, when
demand should be peaking, perhaps inflation could subside," said
Hirokazu Kabeya, chief global strategist at Daiwa Securities.
STEADY DOLLAR DENTS OIL
In the currency market, the dollar held firm after
Wednesday's strong U.S. inflation reading fanned expectations
the Fed would tighten monetary policy faster than previously
thought.
An index of the dollar against six other currencies
was slightly firmer at 95.160 in its third straight day of gains
and hitting its highest level since July 2020.
The yen softened to 114.02 per dollar, near its
four-year low hit last month, while commodity currencies such as
the Australian dollar and the Canadian dollar were on a back
foot.
Oil prices dipped as the market grappled with a stronger
U.S. dollar, along with concern over increasing U.S. inflation,
and after OPEC cut its 2021 oil demand forecast due to high
prices.
Brent crude futures were down 0.66% at $82.21 per
barrel while U.S. West Texas Intermediate (WTI) futures
dropped 1.12% to $80.66 per barrel.
Gold prices eased off Wednesday's five-month highs to $1,849
per ounce, down 0.6% on the day.
Shares in Asia were largely steady, with Japan's Nikkei
up 1.13%, helped by brisk earnings. MSCI's broadest
index of Asia-Pacific shares outside Japan rose
0.62% but mainland Chinese shares were softer, with CSI 300
index slipping 0.2%.
(Additional reporting by Hideyuki Sano; Editing by Sam Holmes,
Andrei Khalip)
