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European stocks opened higher on Monday and world stocks were steady at their highest in more than two years, as investors waited for U.S. inflation data due this week to give clues about when the U.S. Federal Reserve might cut rates.

The S&P 500 rose above 5,000 points for the first time ever last week, boosted by tech stocks, and world equities have risen for three weeks straight, even though U.S. Treasury yields have edged higher recently as investors lower their expectations for how soon the Fed could cut rates.

With most major Asian markets closed for holidays, analysts said they expected a quiet day in markets as traders wait for U.S. inflation data on Tuesday, as well as British inflation data and euro zone GDP on Wednesday.

"We are seeing markets dialling back expectations for rate cuts,” said UBS multi-asset strategist Kiran Ganesh, adding that markets were pricing fewer than five cuts in the U.S. this year, down from six or seven at the start of the year.

"The equity market has remained relatively immune to that because the reason why we’ve seen less interest rate cuts expectations has been down to stronger economic growth which of course is good for equities as well."

Strong U.S. jobs data earlier in February meant investors reduced expectations for a Fed rate cut at its next meeting, with markets pricing an 84.5% chance of rates remaining unchanged in March.

At 0857 GMT, the MSCI world equity index, which tracks shares in 47 countries, was flat on the day, having touched its highest since January 2022 earlier in the session.

The pan-European STOXX 600 was up 0.3%, having held relatively steady in February but gained 1.4% in January.

London's FTSE 100 was little changed, and Germany's DAX was up 0.2%.

Ganesh said the equity rally was "somewhat concentrated in a few names", as excitement around artificial intelligence boosts tech stocks.

"I don’t it should come as a surprise if we see some period of consolidation in the next weeks or months," he said, adding that he was still "very positive" on the AI trend.

The U.S. dollar index was up around 0.1% at 104.130, and the euro was a touch lower at $1.0774, coming down from a 10-day high hit earlier in the session.

YEN STEADY

The Japanese yen, which has weakened as U.S. rate cut expectations have reduced, was steady at 149.190 per dollar.

Investors have also reduced their expectations for rate cuts by the European Central Bank, after two policymakers said last week that the ECB needs more evidence that inflation is easing before it can cut rates.

Euro zone government bond yields, which rose sharply last week, were a touch lower on Monday, with the benchmark German 10-year yield down by one basis point at 2.373%.

Oil prices were down, after Israel saying it had "concluded" a series of strikes in southern Gaza slightly eased worries about supply from the Middle East. Brent crude futures were down 0.5% at $81.82 per barrel and West Texas Intermediate crude futures were down 0.5% at $76.46 per barrel.

Gold was a touch lower at $2,022.6 per ounce <XAU=.

Markets in China, Hong Kong, Japan, South Korea, Singapore, Taiwan, Vietnam and Malaysia were closed for holidays.

Mainland China's financial markets are closed for the Lunar New Year holiday and will resume trade on Monday, Feb. 19. Hong Kong trade will resume on Feb. 14.