Investors shifted cautiously Tuesday ahead of the release of key US inflation data that could have a huge bearing on the fate of Federal Reserve interest rate cuts this year.

The tepid performance mirrored an uninspiring day on Wall Street, where the Dow fell after an eight-day winning streak, though a strong showing for Chinese tech firms helped Hong Kong extend a rally that has seen it power around 30 percent higher from its January low.

A recent run of soft US jobs data has lifted spirits on trading floors that the Fed will be able to reduce borrowing costs this year.

However, this week will provide a key test of that optimism with the release of April's consumer price index (CPI) on Wednesday, which follows Tuesday's release of producer prices.

The readings come after forecast-beating figures for the first three months of the year that have seen investors whittle down their expectations for the number of rate cuts -- from six in January to at most two now.

Analysts said a miss in either direction on CPI could have a big impact on markets, with JPMorgan Chase & Co's Andrew Tyler saying "the key risk is a hotter CPI print".

"But upcoming macro data creates a two-tailed risk -- with one tied to stronger-than-expected growth fuelling inflation concerns and the other being weaker growth fuelling either recession or 'stagflation' concerns," he said.

The reports come after a survey by the New York Fed showed inflation expectations among US consumers had climbed to their highest level since November.

Rodrigo Catril at National Australia Bank added: "The CPI is expected to show US inflation slowed slightly in April, and if so, it would add to further evidence that the jump in US inflation at the start of the year was a temporary blip.

"That said, any small deviation from the consensus could trigger a meaningful reaction in markets given the current heightened degree of (sensitivity) around inflation and the outlook for Fed policy."

Asian markets were mixed in Tuesday business, with Hong Kong lifted by gains in tech titans including Tencent and Alibaba as they prepare to announce their first-quarter earnings.

Chris Weston, at Pepperstone Group, warned that "both will need to deliver earnings above consensus results and inspiring guidance, as expectations are high".

Tokyo, Singapore, Taipei, Seoul, Taipei, Manila, Mumbai and Bangkok also rose, though Shanghai, Sydney, Wellington, Jakarta and Manila slipped.

London and Paris were flat at the open while Frankfurt was lower.

"This week's reports are likely to depict a second-quarter economic environment where real GDP and consumer demand are slowing to a more sustainable pace, while inflation remains persistent," said SPI Asset Management's Stephen Innes.

"This scenario may allow for potential rate cuts from the Fed later in the year, possibly by September, despite the near-term inflation outlook remaining uncertain."

- Key figures around 0715 GMT -


Tokyo - Nikkei 225: UP 0.5 percent at 38,356.06 (close)

Hong Kong - Hang Seng Index: UP 0.1 percent at 19,126.12

Shanghai - Composite: DOWN 0.1 percent at 3,145.77 (close)

London - FTSE 100: FLAT at 8,419.06

Dollar/yen: UP at 156.44 yen from 156.21 yen on Monday

Euro/dollar: DOWN at $1.0787 from $1.0792

Pound/dollar: UP at $1.2557 from $1.2555

Euro/pound: DOWN at 85.91 from 85.93 pence

West Texas Intermediate: UP 0.1 percent at $79.17 per barrel

Brent North Sea Crude: UP 0.1 percent at $83.40 per barrel

New York - Dow: DOWN 0.2 percent at 39,431.51 (close)

-- Bloomberg News contributed to this story --