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Global stocks held steady on Tuesday, while the dollar eased modestly ahead of U.S. inflation data that could persuade the Federal Reserve and other central banks to step back from aggressive interest rate hikes.

Headline consumer price pressures for November in the world's largest economy are expected to have fallen for a fifth successive month, which in theory would take some pressure off the Fed to raise rates for an extended period of time - something investors have been banking on for months now.

The MSCI All-World index was up 0.2% by midday in Europe. It's on course for its first monthly decline since September, having lost 1.2% so far, but is still on track for a 12.6% gain this quarter, its strongest quarterly performance since the final three months of 2020.

However, core inflation, which strips out food and energy prices - two key drivers of the rise in price pressures over the last year - has steadily risen in this time.

The core consumer price index is expected to have risen by 6.1% in November from October's 6.3%, while headline inflation is forecast to have fallen to 7.3% from 7.7%.

"At the moment, market sentiment has really been built on the idea that U.S. inflation is heading lower, so I think that if that doesn't happen ... if we saw that even flatline, there is a significant risk here that it undermines what we’ve been seeing in terms of the market move towards the upside and the gains we’ve seen over Q4 so far," IG strategist Joshua Mahony said.

The dollar was flat against a basket of major currencies, holding roughly steady against the euro, the yen and the pound. It's lost nearly 6.5% in value so far in the fourth quarter, largely because investors believe U.S. inflation has peaked.

In Europe, stocks got off to modestly higher start, led by gains in oil and gas companies thanks to a 1.1% rise in crude oil prices after the temporary shutdown of a key pipeline that feeds into the United States. That added to concerns around a squeeze on supply, especially as China is loosening some of its strict COVID restrictions.

The STOXX was up 0.7%, while London's FTSE 100 gained 0.2%, as did Frankfurt's DAX.

In China itself, blue chip stocks dropped between 0.2% and 0.3% as investors factored in the chances that looser restrictions on activity would lead to a surge in COVID infections that could hamper economic growth.

But a tourism-linked index jumped more than 2% as Hong Kong eased COVID-19 restrictions for inbound travellers.

Later this week, the Fed, European Central Bank and the Bank of England (BoE) are all expected to raise rates by 50 basis points (bps), rather than the 75 bps hikes they delivered earlier in the year.

The pound edged up against dollar, up 0.2% to $1.2296 and by a similar amount against the euro, which traded around 85.73 pence, after data showed a rise in UK unemployment and an increase in wage growth that will keep BoE policymakers on edge when they meet this week.

Oil rallied for a second day, having jumped 2.5% on Monday, with Brent crude futures up 1.1% at $78.88 a barrel and West Texas Intermediate crude up 0.9% at $73.85. [O/R]

Gold futures, which are sensitive to shifts in U.S. inflation, were last up 0.2% at $1,783.20 an ounce.