World shares stalled just below record highs on Monday as investors awaited inflation data from the United States and euro zone that could further refine interest rate expectations.

The data will provide the next test for investors, who have had to rethink their bets on central bank rate cuts in recent weeks, surprised by strong U.S. job growth and inflation.

MSCI's global equity index was trading flat, after rising to a record high last week when U.S. stocks touched new highs helped by huge gains for AI diva Nvidia.

U.S. stock futures were also mostly little changed on the day, suggesting a pause for Wall Street after last week's tech-driven rally.

In Europe, the STOXX 600 index was down a quarter of a percent, also holding below record highs hit last week, as a note of caution prevailed.

Japan's blue-chip Nikkei scaled to record highs for the second consecutive trading session, supported by upbeat performances in pharmaceuticals, although profit-taking limited momentum.

Market focus now turned to upcoming data.

The U.S. Federal Reserve's favoured measure of inflation - the core personal consumption expenditures (PCE) price index - is due on Thursday with a Reuters poll expecting a rise of 0.4%, up from 0.2% in December.

Markets have pushed out the likely timing of a first Fed easing to June, from May earlier in February. Futures imply a little more than three quarter-point cuts this year, compared to five at the start of the month.

Euro zone inflation data follows on Friday, with the core figure seen slowing to the lowest since early 2022 at 2.9%, nearing the bank's 2% overall inflation target.

Traders have also pushed back their bets on when the European Central Bank will start cutting, to June, versus April when the ECB met in January.

"While potentially causing a knee-jerk hawkish repricing, the implications of such a surprise on the Fed policy outlook seem relatively limited, hence (a higher-than-expected) print may not pose too significant a risk to the ongoing global equity rally," said Michael Brown, analyst at broker Pepperstone.

Brown added that the euro zone print was of more interest, with a sub-3% core inflation reading meaning "significant scope for a dovish repricing".

Comments from ECB policymakers prompted optimism over rate cuts on Friday and a broad bond market rally.

On Monday, global bond yields were little moved.

The benchmark 10-year U.S. Treasury yield was down just 1.2 basis points to 4.24%, having hit three-month highs last week before Friday's rally.

The market faces a tough test with the Treasury selling $127 billion of two and five-year notes on Monday, with another $42 billion in seven-year paper due on Tuesday.

Investors were also watching the risk that U.S. government agencies could be shut down if Congress cannot agree on a borrowing extension by Friday.


Alongside inflation, focus is also on monetary policymakers, with ECB President Christine Lagarde and the Bank of England's chief economist scheduled to speak on Monday.

At least 10 Fed speakers are on the agenda this week, and are likely to repeat their mantra of staying cautious on rates.

Elsewhere, the Reserve Bank of New Zealand (RBNZ) holds its first policy meeting of the year on Wednesday. Markets see a chance it could hike rates given stubborn inflation, though the country likely slipped into recession in the fourth quarter.

In currency markets, the U.S. dollar was a touch lower against a basket of currencies.

The yen was marginally lower against the dollar ahead of Japanese inflation data on Tuesday, forecast to slow to 1.8%. That could add to the case against policy tightening by the Bank of Japan, the holdout dove among developed market central banks.

Oil prices fell on Monday, extending losses on market views that higher than expected inflation could delay cuts to high interest rates that have been capping growth in global fuel demand.

Brent crude futures fell 27 cents, or 0.3%, to $81.34 a barrel. U.S. West Texas Intermediate crude futures (WTI) CLc1 were down 24 cents, or 0.3%, at $76.22.

Gold was down 0.2% at $2,032 an ounce, having rallied 1.4% last week.

(Reporting by Yoruk Bahceli and Wayne Cole; Editing by Shri Navaratnam, Jacqueline Wong, Lincoln Feast, Susan Fenton and Ed Osmond)