World stocks inch higher; dollar at 7month lows
Yen gains on report BOJ to scrutinise policy effects
Eyes on U.S. CPI due at 1330 GMT
Treasuries and euro zone bonds add to gains

MILAN, Jan 12 Reuters Stocks made modest gains on Thursday on cautious optimism that U.S. data will confirm inflation is softening, while the yen rose on expectations the Bank of Japan will review the side effects of its ultraeasy policy.

A MSCI gauge of world stocks rose 0.4 to a fourweek high by 1111 GMT ahead of data expected to show U.S. headline consumer inflation slow 6.5 in December from 7.1 the previous month, with core inflation, seen at annual 5.7, down from 6 a month earlier. Monthonmonth headline inflation is seen at zero.

Bonds also rose, mirroring hopes of a softer inflation report, and the U.S. dollar was near sevenmonth lows against a basket of currencies. Europe39;s STOXX 600 equity benchmark index rose 0.6 to its highest since April 2022.

The U.S. data due at 1330 GMT is set to have a big impact on markets by shaping expectations of the speed of interest rate hikes in the world39;s biggest economy. Markets have priced betterthaneven odds that the Federal Reserve raises rates by 25 basis points, rather than 50, at February39;s meeting.

Both the worst and best days for the SP 500 in 2022 came on days of a CPI release. As such, it39;s inevitable that todays U.S. CPI has the ability to shape the next month, wrote Deutsche Bank strategist Jim Reid.

The latest releases have…