SINGAPORE/LONDON (Reuters) - World shares marked time on Tuesday, holding just shy of record highs ahead of highly anticipated US inflation data, while Japanese bonds were squeezed as the central bank pulled back a little on its bond-buying programme.
MSCI's world share index was flat on the day but remained around 0.3% below mid-March's all-time high. National and region-wide share benchmarks in Europe (.STOXX), many at or around record territory, were steady, as were US S&P 500 futures.
A broadly positive first quarter-earnings season has helped stock markets in recent weeks, but investors this week have been cautious ahead of important US inflation data.
The US producer price index due at 1230 GMT is Tuesday's main macroeconomic event, though it will likely be overshadowed by Wednesday's consumer inflation numbers, one of the major data points of the month.
"Today's a warm-up, but tomorrow's US CPI is what people are waiting for," said Jan von Gerich, chief strategist at Nordea.
Expectations are for core CPI to slow from an annual 3.8% in March to 3.6% in April. Investors will be watching to see whether some upside surprises in the first quarter were a blip or a worrying trend that could force the Federal Reserve to keep rates elevated throughout this year.
"I think that expectations (for hotter inflation) have risen and so it will be hard to beat them. You've had three upside surprises in a row and so if we come in line with expectations, then rates will fall," von Gerich said.
The benchmark 10-year US Treasury yield was last at 4.479%, flat on the day, down from mid-April's five-month high of 4.739%, but still sharply up from the 3.899% at which it started the year.
A survey released on Monday by the New York Fed showed Americans see inflation a year from now at 3.3%, higher than they did a month earlier.
British government bonds, or gilts, slightly outperformed European peers after data showed British wages grew by more than expected, but other figures suggested the labour market was losing some inflationary heat.
The British 10-year yield was a fraction lower at 4.17%, and Germany's was around 2 basis points higher at 2.52%.
In company news, Delivery Hero (DHER.DE) soared 23%, on track for its biggest one-day gain, after Uber (UBER.N) announced a $1.25 billion deal to take over its food panda food delivery business in Taiwan and buy new shares in the German firm.
Anglo American (AAL.L) laid out a strategy update that includes exploring options for its steelmaking coal, nickel and platinum businesses, as it fends off a takeover bid from BHP (BHP.AX).
Also still to come on Tuesday, Federal Reserve Chair Jerome Powell is due to speak at 1400 GMT.
US President Joe Biden on Tuesday unveiled a bundle of steep tariff increases on an array of Chinese imports including electric vehicles, computer chips, and medical products.
The announcement came after market close in China, but US-listed shares of Chinese EV makers Li Auto and Xpeng slid 3.1% and 2.5%, respectively, in premarket trading.
Hong Kong's Hang Seng index (.HSI) is up 30% from January's lows and has surged nearly 20% in a month as money has flowed in steadily from mainland buyers.
Investors have welcomed news China will issue one trillion yuan in special bonds as a harbinger of spending, while weak lending data also shows monetary easing is reaching its limit. Hang Seng volumes last week were the largest in 17 months.
"Some of my clients are asking me every day what to buy and when to buy because they still have an underweight position in Hong Kong stocks," said Steven Leung, executive director at brokerage UOB Kay Hian in Hong Kong.
"I think this situation can continue for a while."
Also catching the eye in Asia, benchmark 10-year Japanese government bond yields rose two basis points to 0.96%, the highest yield since November, a day after Japan's central bank unexpectedly cut the amount of bonds it offered to buy in a regular purchase operation.
The gap with US yields, however, remains hundreds of basis points and wide enough to keep the frail yen under pressure.
The yen traded as soft as 156.4 to the dollar. The euro was steady at $1.0797.
Brent crude futures were down 0.2% to $83.18 a barrel and spot gold was up 0.3% at $2,342 an ounce.