LONDON, May 29 — Stock markets fell today as indicators and comments from central bankers further dented hopes for interest rate cuts, while oil kept rising after an attack on a ship in the Red Sea stoked supply worries.

Many investors sought to lock in recent gains ahead of a series of crucial inflation data reports at the end of the week in the eurozone and the United States.

A forecast-beating report yesterday on US consumer confidence further added to evidence the economy is not slowing fast enough to allow the Federal Reserve to cut borrowing costs any time soon.

A higher-than-expected inflation report in Australia today soured the mood in Asian trading.

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In addition, US Treasury yields — a proxy for interest rates — moved higher.

"The bump in rates has been cited as a headwind, but one can't forget that this market — and certain stocks — have made a big move in a short amount of time," said Patrick O'Hare, an analyst at Briefing.com.

All three major US indexes opened lower in New York.

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Providing more gloom, US central bank official Neel Kashkari warned that decision-makers had not ruled out a possible hike if they continue to struggle to bring prices down to their two per cent target.

"Kashkari's latest comment about a lingering restrictive stance, stating that additional rate hikes haven't been completely ruled out, has significantly dented investors' risk appetite," said ActivTrades analyst Ricardo Evangelista.

His comments come after several other Fed officials have recently said they were cautious about cutting too soon and wanted to see more data proving inflation was coming back down to two per cent.

The next major US indicator is Friday's Personal Consumption Index, the Federal Reserve's favourite inflation index.

On the same day, eurozone inflation data for May will be published and a further cooling would reaffirm expectations of a June rate reduction from the European Central Bank.

Data today showed inflation in Germany, Europe's biggest economy, accelerated to 2.4 per cent in May, though analyst said it was due to one-off factors and it would not affect the ECB's rate-cut move.

All the main stock markets in Europe were lower, following on from weak markets in Asia.

Among individual stocks, Anglo American shares were down 1.9 per cent in London after the mining giant rejected a request from BHP to extend a Wednesday deadline for takeover talks, putting the Australian group's bid on the brink of collapse.

In commodity trading, oil prices rose after a bulk carrier was attacked in the Red Sea, a key waterway for tankers shipping crude.

The strike heightened concerns about tensions in the region as Israeli forces continue a ground invasion of Rafah in southern Gaza.

Also on traders' minds is the upcoming meeting of OPEC and other key oil producers that is expected to see them roll over output cuts.

Expectations that interest rates could drop earlier in Europe than in the US helped firm up the dollar against most of its peers. — AFP

Key figures around 1340 GMT

New York - Dow: DOWN 1.0 per cent at 38,463.48

New York - S&P 500: DOWN 0.8 per cent at 5,265.48

New York - Nasdaq Composite: DOWN 0.7 per cent at 16,897.75

London - FTSE 100: DOWN 0.7 per cent at 8,194.69 points

Paris - CAC 40: DOWN 1.6 per cent at 7,931.75

Frankfurt - DAX: DOWN 1.2 per cent at 18,449.10

EURO STOXX 50: DOWN 1.4 per cent at 4,960.95

Tokyo - Nikkei 225: DOWN 0.8 per cent at 38,556.87 (close)

Hong Kong - Hang Seng Index: DOWN 1.8 per cent at 18,477.01 (close)

Shanghai - Composite: UP 0.1 per cent at 3,111.02 (close)

Dollar/yen: UP at 157.28 from 157.14 yen on Tuesday

Euro/dollar: DOWN at US$1.0835 from US$1.0862

Pound/dollar: DOWN at US$1.2739 from US$1.2763

Euro/pound: DOWN at 85.06 from 85.09 pence

West Texas Intermediate: UP 0.4 per cent at US$80.15 per barrel

Brent North Sea Crude: UP 0.3 per cent at US$84.49 per barrel