(Alliance News) - Stocks in London are likely to make a strong start on Wednesday, as optimism about interest rate cuts in the US continues.

IG says futures indicate the FTSE 100 is set to open up 42.5 points, 0.6%, at 7,740.01 on Wednesday. The index of London large-caps closed up 2.78 points at 7,697.51 in Friday's half-day session before the Christmas holidays.

In the US on Tuesday, Wall Street ended higher. The Dow Jones Industrial Average and the S&P 500 index both closed up 0.4%. The Nasdaq Composite added 0.5%.

"The prevailing sentiment suggests a 'risk-on' environment in US markets, with renewed optimism focused on anticipating swifter and earlier rate cuts," said SPI Asset Management's Stephen Innes.

After the early close in London on Friday, data from the US showed inflation eased a bit more in November.

The Bureau of Economic Analysis said the core personal consumption expenditures price index rose annually by 3.2% in November, slowing from 3.4% in October, which was first reported at 3.5%. The latest figure was just below the FXStreet-cited market consensus of 3.3%.

The core reading, the Fed's preferred inflation gauge, does not include food or energy.

The dollar lost ground against the pound and the euro over the long holiday weekend in Europe but made gains against the yen.

Sterling was quoted at USD1.2733 early Wednesday, higher than USD1.2719 at the London equities close on Friday. The euro traded at USD1.1044, up from USD1.1019. Against the yen, the dollar was quoted at JPY142.67, up versus JPY142.14.

In Asia on Wednesday, the Nikkei 225 index in Tokyo closed up 1.1%. In China, the Shanghai Composite was up 0.5%, while the Hang Seng index in Hong Kong was up 1.9%.

Tech stocks recovered somewhat from Friday's sell-off in Hong Kong.

Chinese authorities said they may revise newly drafted online gaming rules, state media reported Saturday.

The draft restrictions published by Beijing's media regulator on Friday sent shares in tech giants tumbling and wiped tens of billions of dollars off their value, with industry leader Tencent tanking more than 12% in Hong Kong by the close. Tencent was up 4.5% on Wednesday afternoon.

The S&P/ASX 200 in Sydney closed up 0.8% on Wednesday.

Gold was quoted at USD2,066.96 an ounce early Wednesday, higher than USD2,055.55 shortly after midday in London on Friday. Brent oil was trading at USD81.04 a barrel, up from USD80.02.

There are no scheduled events in Wednesday's UK corporate calendar. In the global economic calendar, there will be the US Johnson Redbook retail sales index this afternoon.

By Elizabeth Winter, Alliance News deputy news editor

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