European, Asian stocks up 1 as 2023 optimism continues
Oil slides on lingering demand concerns
Dollar falls as euro bolstered by inflation data

LONDON, Jan 4 Reuters Shares rose and bonds rallied worldwide on Wednesday as investors tiptoed into the new year with tentative optimism after a brutal 2022, looking to encouraging inflation data for hope that rate hikes might be less aggressive than feared.

The panEuropean STOXX 600 was up 1.15 by 1130 GMT as a lower inflation reading from France boosted sentiment, building on positive data from Germany earlier in the week.

Euro zone government bonds likewise extended their rally from the first two trading days of 2023, with the benchmark German 10 year yield sliding 10 basis points on signs central banks are making progress against inflation.

The yield on 10year Treasury notes fell to 3.6809, and 2year Treasury yields , which typically move in step with interest rate expectations, slipped 6 basis points to 4.3409.

MSCI39;s broadest index of AsiaPacific shares outside Japan was 1.69 higher and set for a third straight day of gains for the year, having fallen 20 in 2022, its worst performance since 2008.

The modest recovery in stocks and bonds showed optimism about two of the factors that made 2022 such a hellish year for investors, namely the constant drumbeat of rate hikes to fight inflation and China39;s economythrottling antiCOVID measures.

But jitters in other assets showed the path ahead will be far from smooth,…