Investors will be analysing new inflation data from the U.K. as well as dovish cues from the Bank of Japan as European stock markets start on Wednesday.

Investors will be analysing new inflation statistics from the U.K. as well as dovish cues from the Bank of Japan as European stock markets start on Wednesday.

In the UK, consumer prices increased at a 10.5% annual pace in December, down from 10.7% the previous month, while the monthly rate increased by 0.4%, remaining constant from November.

Although this level remains extremely high, the decline in the yearly figure supports the general idea that inflation in the West has peaked and that central banks should consider slowing the rate at which they raise interest rates.

After the Bank of Japan maintained its present range of yield curve management on Wednesday, contrary to market expectations for further widening in the bank's goal range, which might have led to a tightening of monetary policy, European stocks received a mainly favourable handover from Asia.

The central bank announced that it would retain its accommodating monetary policy for the time being and kept interest rates at historic low levels.

Later in the afternoon, the final publication of the December Eurozone CPI is scheduled, and it is anticipated that it will confirm annual rise of 9.2%, down from 10.1% the previous month.

The markets were also anticipating additional information on the American economy from a number of Federal Reserve speakers, since December's expected decline in retail sales in the United States is expected to push the Fed to pause its rate hike programme.

On increased hope that the removal of COVID restrictions from the Chinese economy will lead to a significant recovery in the need for gasoline in the country that consumes the most petroleum this year, oil prices gained on Wednesday, extending gains from the previous session.

In a monthly report published on Tuesday, the Organization of Petroleum Exporting Countries maintained its forecast for the rise in global oil demand at 2.22 million barrels per day, but it predicted that Chinese oil demand would increase by 510,000 barrels per day this year after contracting for the first time in years in 2022.

The American Petroleum Institute will disclose its weekly prediction of U.S. crude stockpiles a day later than usual following Monday's U.S. holiday. The International Energy Agency will release its monthly assessment later in the day.

(investing.com, reuters.com)